{"id":25507,"date":"2026-05-22T11:50:50","date_gmt":"2026-05-22T10:50:50","guid":{"rendered":"https:\/\/lupicinio.com\/?p=25507"},"modified":"2026-05-22T12:40:32","modified_gmt":"2026-05-22T11:40:32","slug":"alert-cjeu-tightens-scrutiny-of-trusts-and-international-fiduciary-structures","status":"publish","type":"post","link":"https:\/\/lupicinio.com\/en\/alert-cjeu-tightens-scrutiny-of-trusts-and-international-fiduciary-structures\/","title":{"rendered":"Alert: CJEU Tightens Scrutiny of Trusts and International Fiduciary Structures"},"content":{"rendered":"

On 21 May 2026, the Court of Justice of the European Union delivered two judgments of particular significance regarding international sanctions, fiduciary structures and the freezing of assets contributed to a trust<\/em>, in Case <\/strong>C-483\/23<\/strong><\/a> and in the joined cases <\/strong>C-428\/24<\/strong><\/a> and C-476\/24<\/strong>, concerning the interpretation of Article 2 of <\/strong>Regulation (EU) No 269\/2014<\/strong><\/a>[1]<\/a> , adopted as part of the European Union\u2019s restrictive measures against Russia.<\/p>\n

The judgments are of particular interest because they directly address a frequent issue in international practice, namely the use of trusts <\/em>and complex asset vehicles in the context of financial sanctions and asset freezing.<\/p>\n

This legal arrangement allows assets to be transferred to a third party to be managed for the benefit of specific individuals or for a specific purpose. Although formally the assets are no longer under the name of the original owner (the settlor), the latter may continue to retain influence or the ability to benefit indirectly from them. For this very reason, trusts <\/em>are particularly relevant in the context of international sanctions, as they can be used to conceal or formally sever the link between assets and sanctioned individuals, making it difficult to identify who actually controls the assets.<\/p>\n

1. The context of the litigation in Case C-483\/23<\/h2>\n

The dispute stems from the decision by the Italian authorities to freeze shares and assets belonging to several companies indirectly linked to a trust <\/em>established under Bermuda law. That trust <\/em>had been created by a person subsequently included on the list of sanctioned persons in Annex I to Regulation (EU) No 269\/2014.<\/p>\n

One of the most significant aspects of the case was that the settlor had been formally excluded from the circle of beneficiaries of the trust <\/em>prior to the adoption of the sanctions.<\/p>\n

The Italian authorities argued that the fiduciary structure had not resulted in a genuine economic disassociation from the settlor and that the latter continued to exercise substantial influence over the assets and the operation of the trust<\/em>.<\/p>\n

Conversely, the companies concerned challenged the measure before the Italian administrative courts, arguing that the settlor had already been formally excluded from the circle of beneficiaries of the trust <\/em>and that he held no control or beneficial ownership over the assets. They also contended that the assets could no longer be considered legally linked to the sanctioned person, and that, therefore, the freezing order violated the very wording of the European Regulation.<\/p>\n

In view of the interpretative doubts raised, the Italian court decided to refer a question for a preliminary ruling to the CJEU to determine whether assets transferred to a trust <\/em>could still be considered \u2018belonging to\u2019 or \u2018controlled by\u2019 the sanctioned person<\/strong>.<\/p>\n

2. A broad interpretation of the concept of control<\/h2>\n

In response to the question referred for a preliminary ruling\u2014namely, whether the sanctioned settlor can be regarded as the owner and, consequently, whether the assets transferred to a trust <\/em>may be frozen\u2014the Court answers in the affirmative and adopts a particularly broad interpretation of the concepts of \u2018ownership\u2019 and \u2018control\u2019 <\/strong>contained in Article 2(1) of Regulation (EU) No 269\/2014.<\/p>\n

According to the judgment, those concepts cannot be limited to formal ownership of the assets, but must encompass any form of effective influence, indirect power of disposal or the possibility of deriving economic benefit from the assets concerned.<\/p>\n

Specifically, the CJEU states the following: \u2018funds and economic resources contributed to a trust <\/em>by its settlor, included in the list set out in Annex I to that Regulation, must be regarded as \u2018belonging\u2019 to that settlor or \u2018controlled\u2019 by him, within the meaning of that provision, provided that the settlor continues to have the power to use those funds and economic resources, to derive benefits from them, to dispose of them or to exercise influence over them or over the decisions taken by the settlor in relation to those funds and economic resources.\u201d<\/p>\n

The Court considers relevant the ability to influence the trustee\u2019s<\/em> decisions, to derive economic benefit from the assets, to direct the use of the assets, or to maintain mechanisms allowing for the indirect recovery of the assets. It also attaches importance to factual elements such as the existence of relationships of trust between the persons involved, unnecessarily complex corporate structures, or changes made shortly before the imposition of sanctions.<\/p>\n

It further emphasises that the objective of European restrictive measures requires consideration of the underlying economic reality and not merely the formal legal architecture of asset structures. Consequently, the absence of direct legal ownership does not necessarily preclude the existence of control or a relevant economic link for the purposes of sanctions.<\/p>\n

3. Relationship with the concept of the ultimate beneficial owner<\/h2>\n

The CJEU also links its reasoning to European anti-money laundering legislation and to the concept of beneficial ownership set out in Directive (EU) 2015\/849<\/strong>.<\/p>\n

The judgment recalls that, in the context of trusts<\/em>, formal legal ownership and effective economic control may not coincide, a circumstance which obliges authorities and legal practitioners to carry out a substantive analysis of the economic and power relationships existing within the fiduciary structure.<\/p>\n

4. The Court\u2019s concern regarding the circumvention of sanctions<\/h2>\n

One of the most significant aspects of the judgment is the CJEU\u2019s express concern regarding the risk of trusts <\/em>and international fiduciary structures being used as instruments to circumvent financial sanctions.<\/p>\n

The judgment notes that certain particularly complex legal structures may constitute relevant indications of an attempt to maintain effective economic control over assets that appear to be unconnected to the sanctioned person.<\/p>\n

5. The judgment in joined cases C-428\/24 and C-476\/24<\/h2>\n

This judgment, which also originates from two preliminary rulings requested by Italian courts in cases bearing notable similarities to the matter outlined above, upholds a consistent doctrine through similar reasoning to the effect that assets contributed to a trust <\/em>whose beneficiary is subject to sanctions must be regarded as the property of that beneficiary or controlled by them, even where the legal system applicable to the trust <\/em>and the instrument of incorporation prohibit that beneficiary from carrying out any act of enjoyment or disposal of the assets contributed to the trust <\/em>throughout the period in which they remain on the list of sanctioned persons or throughout the period in which the enjoyment or disposal of those assets constitutes a breach of European Union law, provided that the beneficiary is able to use the funds contributed to the trust<\/em>, derive benefit from them, dispose of them or exercise influence over them or over the decisions taken by the trustee <\/em>in respect of those funds.<\/p>\n

It should be noted that, in both this judgment and the one referred to above, the fact that Italy is a party to the Hague Convention on the Law Applicable to Trusts and their Recognition of 1 July 1985 has no real bearing on the final conclusions reached by the CJEU.<\/p>\n

6. Practical consequences<\/h2>\n

The rulings are expected to have significant practical implications for trust companies, offshore<\/em> structures, wealth management advisers and the international compliance departments of financial institutions.<\/p>\n

In particular, the judgments confirm that European and national authorities may adopt an economic and functional interpretation of fiduciary structures when analysing possible links with persons subject to restrictive measures, even where such structures have been formally designed to exclude the sanctioned person from ownership or direct benefit of the assets.<\/p>\n

The rulings thus consolidate a line of case law aimed at strengthening the practical effectiveness of the European Union\u2019s international sanctions through a substantive approach to the concept of economic control and the identification of potential circumvention mechanisms.<\/p>\n

This expansive interpretation, which is already evident in international administrative and financial practice, may also increase instances of overcompliance<\/em>, particularly in the financial and wealth management sectors, where entities tend to adopt particularly conservative risk criteria when faced with complex structures or indirect links to sanctioned persons.<\/p>\n

[1]<\/a> Article 2. \u20181.\u00a0\u00a0\u00a0All funds and economic resources belonging to, owned, held or controlled by any natural persons or natural or legal persons, entities or bodies associated with them as listed in Annex I shall be frozen. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural persons or natural or legal persons, entities or bodies associated with them listed in Annex I. (Council Regulation (EU) No 269\/2014 of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine).\u2019<\/small><\/p>\n

With the collaboration of Jos\u00e9 Luis Iriarte, Professor of Private International Law at the Universidad P\u00fablica de Navarra.<\/em><\/strong><\/p>\n

 <\/p>\n

******<\/p>\n

More information:<\/p>\n

Lupicinio International Law Firm<\/strong><\/span>
\nC\/ Villanueva 29
\n28001 Madrid
\nP: +34 91 436 00 90<\/p>\n","protected":false},"excerpt":{"rendered":"

On 21 May 2026, the Court of Justice of the European Union delivered two judgments of particular significance regarding international sanctions, fiduciary structures and the freezing of assets contributed to a trust, in Case C-483\/23 and in the joined cases C-428\/24 and C-476\/24, concerning the interpretation of Article 2 of Regulation (EU) No 269\/2014[1] ,…<\/p>\n","protected":false},"author":3,"featured_media":25496,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2102,1807,1751],"tags":[],"class_list":["post-25507","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-alerta-en","category-union-europea-en","category-sanciones-internacionales-en"],"yoast_head":"\nAlert: CJEU Tightens Scrutiny of Trusts and International Fiduciary Structures | Lupicinio<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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