Ruling [CJEU] ¦ EU Court Sets Limits on National Asset Freezes Linked to Sanctioned Persons

Asset freezes, informal control and the limits of EU sanctions enforcement

The Court of Justice of the European Union (CJEU) has clarified how national authorities may freeze the assets of companies that are not themselves named on an EU sanctions list but are said to be connected to a listed person. The ruling is particularly relevant for financial crime teams, regulated firms and sanctions compliance officers handling complex ownership structures involving Russian state-linked businesses.

The central point: a vague connection to a sanctioned person is not enough. A national authority must establish that the targeted company’s funds or economic resources belong to, are owned, held or controlled by a person or entity listed under EU restrictive measures.

That distinction has direct consequences for asset freezing decisions, transaction screening, beneficial ownership reviews and the management of money-laundering risk connected with sanctions evasion.

A link is not sufficient to justify a freeze

EU restrictive measures require the freezing of funds and economic resources belonging to, owned, held or controlled by listed persons, entities or bodies. National authorities may identify unlisted companies whose assets fall within that scope and publish national implementation lists to make the freeze effective in practice.

However, the Court drew a clear line between a legally relevant ownership or control relationship and an undefined “link”. Personal, commercial, political or geographical associations do not, by themselves, prove that a listed person owns, holds or controls an unlisted legal person.

For financial institutions, this supports a risk-based but evidence-led approach. A sanctions alert involving an indirect association should trigger enhanced review, but it should not automatically lead to an indefinite block or asset freeze unless the ownership, holding or control test is met under the applicable sanctions regime.

Bastian Schwind-Wagner _Follow

"The Court of Justice of the European Union has confirmed that national authorities may freeze the assets of an unlisted company where those assets belong to, are owned, held or controlled by an EU-sanctioned person. A general commercial or political connection is not enough: the authority must identify a legally relevant ownership or control relationship supported by solid evidence.

The ruling is important for sanctions and anti-money laundering compliance because indirect and informal control can be relevant, particularly in complex state-linked structures. However, assumptions based solely on a country’s political system or a person’s public position cannot replace evidence showing actual influence over the specific company concerned."

Control may be indirect and informal

The Court also confirmed that control is broader than formal share ownership. A listed person may control a company even without a direct legal tie, a registered shareholding or a documented equity interest. The key issue is whether that person has a genuine and specific ability to influence the company’s decisions or its assets.

This is significant in cases involving opaque corporate structures, state-controlled enterprises, nominees, family members, intermediaries and informal political influence. Such structures are common in financial crime typologies connected with sanctions evasion, corruption and the laundering of proceeds derived from predicate offences.

The Court accepted that indirect or informal control can be established through a sufficiently specific, precise and consistent body of evidence. Relevant evidence may include voting arrangements, board appointments, financing dependencies, contractual rights, operational decision-making patterns, state ownership, sectoral monopolies, export licences, public procurement relationships and the practical ability to direct the company’s affairs.

Yet a broad assertion that a third country has an autocratic political system, or that its head of state holds extensive powers, cannot alone establish control over a particular company. The evidence must connect the listed person to the specific legal person whose assets are being frozen.

Implications for money laundering investigations

Sanctions breaches and sanctions evasion may be closely connected to money laundering. Where assets are concealed through complex ownership chains, shell companies indirect control arrangements, the conduct may involve predicate offences such as corruption, fraud, tax crimes, breach of sanctions, bribery or misappropriation of public assets.

A company may be used to hold or move assets for a designated individual while appearing independent on paper. In that setting, the sanctions analysis and the anti-money laundering analysis will often overlap. Financial institutions should assess not only legal ownership but also the source of funds, the source of wealth, transaction purpose, counterparties, governance arrangements and evidence of who exercises actual influence.

Indicators of concern can include abrupt changes in ownership shortly before or after a sanctions designation, transfers to newly created entities, unexplained use of intermediaries, circular payments, trade transactions without a credible economic rationale, unusual financing from state-linked entities and transactions involving high-risk sectors such as energy, defence, transport, extractives or strategic infrastructure.

Where such factors point to sanctions evasion or a possible predicate offence, firms may need to consider whether a suspicious transaction report (STR) or suspicious activity report (SAR) is required under national anti-money laundering rules. A sanctions freeze does not remove the need for ongoing financial crime monitoring. On the contrary, it may reveal attempts to dispose of, disguise or transfer frozen economic resources.

National implementation measures require effective safeguards

National authorities may take implementation measures to identify companies whose funds are effectively controlled by listed persons. Such measures can provide legal certainty for banks, payment institutions, corporate service providers, registries and other market participants.

The Court found that an authority may impose an initial freeze without hearing the affected company in advance. The surprise element can be necessary to prevent assets from being moved before the measure takes effect. This reflects the operational reality of both sanctions enforcement and financial crime prevention, where advance notice may facilitate dissipation, layering or concealment of assets.

The affected party must nevertheless receive the reasons for the measure promptly enough to challenge it. Where a later measure is adopted after assets have already been frozen and there is no longer a real risk that notice would undermine the freeze, the ordinary safeguards become more important, including prior notification and an opportunity to be heard.

Courts must test the evidence, not merely accept the allegation

Effective judicial protection requires more than a formal review. National courts must be able to assess whether the authority gave adequate reasons, established the relevant facts and complied with procedural rules. They must also verify whether the evidence provides a sufficiently solid basis for finding that a listed person owns, holds or controls the unlisted company.

That review does not require national courts to revisit the broader political and security assessment underlying the EU’s original designation decision. The national authority’s role is narrower: it must show that the assets targeted by its implementation measure are legally or factually connected to a listed person through ownership, holding or control.

The burden remains with the authority imposing the measure. The company concerned does not bear the burden of proving a negative, namely that it is not controlled by the listed person.

Compliance teams should document the control analysis

For regulated firms, the ruling reinforces the importance of maintaining a documented control analysis rather than relying only on name screening or percentage-based ownership checks.

Shareholding thresholds remain important, particularly where a listed person holds 50% or more of a company or has a majority interest. But a compliance assessment should not stop there. It should consider whether a sanctioned person can appoint or remove directors, direct management, influence voting, control bank accounts, dictate business strategy, provide decisive financing or otherwise exercise practical authority over the company.

At the same time, firms should avoid treating country risk, political exposure or state affiliation as conclusive proof of ownership or control. These factors may be relevant context, but asset freezing decisions require company-specific evidence.

A stricter evidential standard for complex sanctions cases

The judgment provides a useful framework for complex cases involving Russian state-linked entities and other businesses operating in jurisdictions where formal corporate records may not reveal the full picture. Informal influence can be relevant. Indirect control can be relevant. Political power can be part of the factual context.

But none of these factors eliminates the need for objective and sufficiently solid evidence demonstrating actual control over the company in question.

Sanctions compliance, beneficial ownership analysis and anti-money laundering controls must work together. Institutions should identify indirect influence, investigate suspicious corporate structures and assess possible predicate offences, while ensuring that restrictive action is grounded in evidence that can withstand regulatory and judicial scrutiny.

Dive deeper

• InfoCuria ¦ Case C-147/25 Inter Rao Lietuva ¦ Link
• EUR-Lex ¦ Case C-147/25 Inter Rao Lietuva, Judgment of the Court (Fifth Chamber) of 3 September 2026 ¦ Link