EU forbids Russians to create trusts

The EU forbids Russian citizens to create trusts in the Member States

The fifth EU sanctions package included inter alia restrictions for Russian wealthy citizens to use EU based trust services.

According to the EU Regulation No. 2022/576, restrictions apply to the following categories of Russia linked persons.

1.  Russian nationals or natural persons residing in Russia;
2.  legal persons, entities or bodies established in Russia;
3.  legal persons, entities or bodies whose proprietary rights are directly or indirectly owned for more than 50 % by a natural or legal person, entity or body referred to in points (a) or (b);
4.  legal persons, entities or bodies controlled by a natural or legal person, entity or body referred to in points (a), (b) or (c); and
5.  a natural or legal person, entity or body acting on behalf or at the direction of a natural or legal person, entity or body referred to in points (a), (b), (c) or (d).

Notwithstanding the above mentioned, the restrictions do not apply when the trustor or beneficiary is a national of a Member State or a natural person having a temporary or permanent residence permit in a Member State.

The prohibition applies to the EU based trusts or any similar legal arrangements having as a trustor or a beneficiary.  The following professional services are affected, that are prohibited:

1. To register, provide a registered office, business or administrative address;
2. To provide management services; and
3. To act as, or arrange for another person to act as, a trustee, nominee, shareholder, director, secretary or a similar position.

The third restriction comes into force as of 10th of May 2022. With this the EC grants a grace period to the service providers to make necessary re-appointments or to resign from their position.

It remains unclear, whether those restrictions applies to the nominee shareholders and directors of limited companies registered in the EU and on offshore centres like Malta and Cyprus.

Previously it was informed that around half of the top Russia’s  billionaires escaped sanctions.