![Ruling [CJEU] ¦ EU Court Sets a Broad Standard for Sanctions Control Over Trust Assets](/assets/images/posts/pexels-ryanlans-11428401_1024.webp)
21 May 2026
Ruling [CJEU] ¦ EU Court Sets a Broad Standard for Sanctions Control Over Trust Assets
Trust Structures Are Not a Safe Shield Against Freezing Measures
The Court of Justice of the European Union (CJEU) has taken a clear stance on how EU sanctions law applies to assets held in trust. In Joined Cases C-428/24 and C-476/24, the Court ruled that funds and economic resources held in a trust can be treated as “belonging” to or being “controlled” by a beneficiary who is listed under Article 2(1) of Regulation No 269/2014, even where the trust deed and the applicable trust law prohibit that beneficiary from directly enjoying or disposing of the assets while listed.
For financial crime and sanctions compliance teams, the message is straightforward: Formal legal distance is not enough. What matters is whether the listed person can still use, benefit from, dispose of, or influence the assets, directly or indirectly, including through the way the trust is structured and managed.
Why the Case Matters
The cases arose from Italian proceedings involving trust structures holding corporate interests and, in one case, a large boat owned by a company inside the trust structure. The listed persons were beneficiaries of discretionary trusts governed by Bermuda law. The trusts contained compliance clauses that prohibited any distribution of benefits to a listed beneficiary.
The key argument made by the claimants was that a beneficiary of a discretionary trust has no legal right to the trust assets and cannot demand distributions. On that view, the assets should not be treated as belonging to, or controlled by, the beneficiary for sanctions purposes.
The Court rejected any narrow reading that would allow formal trust mechanics to defeat the purpose of restrictive measures.
The Court’s Core Reasoning
The Court said Article 2(1) of Regulation No 269/2014 must be interpreted independently and uniformly across the EU. It held that the concepts of “belonging to” and “control” are broad and cover legal and factual situations in which a listed person has power over the assets, even if that power is not reflected in formal ownership documents.
The Court looked closely at the function of trusts. It noted that a trust separates legal ownership from beneficial ownership, which makes it useful in legitimate planning but also potentially attractive for concealment. That structure can be used to obscure the real link between a listed person and assets held in the trust.
The decisive question is not just who holds title. It is whether the listed beneficiary can, in practice, use, benefit from, dispose of, or influence the assets or the trustee’s decisions.
Compliance Clauses Do Not End the Analysis
A notable part of the ruling is the Court’s treatment of compliance clauses in trust deeds. The trusts in these cases included provisions stating that no benefits could be paid to a beneficiary while that person was subject to EU restrictive measures.
The Court held that this does not settle the matter. Such clauses are relevant, but they are not decisive. They do not automatically break the link between the listed person and the assets. The national court must still examine the factual reality, including how the trust is managed, who controls the trustee, how decisions are made, and whether the beneficiary can exert influence in practice.
That approach is important because it prevents sanctions structures from being defeated by carefully drafted contractual language that may be changed, reversed, or ignored in practice.
A Practical, Not Just Formal, Test
The ruling makes clear that sanctions authorities and courts must look beyond paper arrangements. The Court pointed to several factual indicators that may show influence or control, including the relationships between the beneficiary and the trustee, settlor, or protector, the use of complex corporate chains, the absence of credible business activity, and the use of entities or trusts that were created or altered around the time of sanctions designation.
This is a substance-over-form approach. It is especially relevant where a trust holds shares in operating companies that then hold assets such as vessels, real estate, or other high-value items. Even if the listed beneficiary is not the registered owner of the asset, the structure may still be caught if the beneficiary can influence the trustee or benefit from the underlying economic resources.
Implications for Sanctions and Financial Crime Controls
This judgment is likely to have a wide impact on sanctions screening, asset tracing, and trust-related due diligence. Institutions cannot assume that a trust automatically removes assets from the scope of a freezing measure. They must assess whether a listed person is the beneficiary and whether the facts suggest real influence or de facto control.
For banks, fiduciaries, law firms, corporate service providers, and asset managers, the practical lesson is that trust documentation alone is not enough. Compliance teams should expect regulators and courts to ask who really benefits, who can shape decisions, and whether the structure has been used to distance a listed person from assets without breaking the underlying link.
A Wider Message on Evasion Risk
The Court also tied its interpretation to the anti-circumvention rule in Article 9 of Regulation No 269/2014. That is significant. It signals that the law must be read in a way that preserves the effectiveness of sanctions and prevents their neutralisation through layered ownership, nominee structures, or trust arrangements.
In financial crime terms, the decision reflects a familiar theme. Sophisticated structures are not automatically unlawful, but they become highly relevant when they are used to conceal control, disguise beneficial ownership, or frustrate enforcement.
Bottom Line
The Court has confirmed that a listed beneficiary cannot rely on the form of a discretionary trust alone to avoid EU asset freezing measures. If the beneficiary can in practice use, benefit from, dispose of, or influence the trust assets or the trustee’s decisions, those assets may be treated as belonging to or controlled by that person under Article 2(1) of Regulation No 269/2014.
For sanctions enforcement and financial crime compliance, that means deeper look-through analysis is now even more important. Trusts may create legal separation, but they do not create immunity from freezing measures where control remains in substance with the listed person.
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