The UK clarify that the government's approach to ownership and control in sanctions regulations is rooted in the primary goal of preventing the circumvention of sanctions. This framework, applicable to all sanctions regimes including the Russia (Sanctions) (EU Exit) Regulations 2019, dictates that entities owned or controlled, directly or indirectly, by designated individuals or entities, will face asset freezes and financial restrictions.

Ownership or control is established through criteria such as holding more than 50 per cent of shares or voting rights, the ability to appoint or remove a majority of the board or having a substantial influence over the entity's affairs. It is crucial for businesses and individuals to conduct thorough due diligence, considering factors outlined by the OFSI, though without a rigid, one-size-fits-all approach.

In the realm of public officials and control of public bodies, the FCDO distinguishes between routine transactions with public bodies from sanctions measures targeting public officials. The FCDO critically states that it does not automatically apply sanctions to public bodies led by designated officials but requires concrete evidence of control for designation.

For public officials and the control of private entities, the UK government again emphasises the need for specific evidence. It rejects the presumption that a private entity is automatically under the control of a designated public official solely based on its location or incorporation in a jurisdiction where the official holds a prominent economic role. Control is determined through a meticulous evaluation of evidence, ensuring a case-specific approach.

In particular, concerning regulation 7(4) of the Russia (Sanctions) (EU Exit) Regulations 2019, the UK government does not assert President Putin's indirect or de facto control over all entities in the Russian economy solely due to his position as the President of the Russian Federation. It is underlined that attributing control to an individual over specific private entities should be depended on substantial evidence established on a case-by-case basis. This clarification is intended to counter the statements of the Court of Appeal raised in the Boris Mints Case.

The joint guidance can be accessed here.

For further guidance on ownership and control, see chapter 4 of OFSI’s general guidance for financial sanctions under the Sanctions and Anti-Money Laundering Act 2018 here.

Our blog post on the ruling in the case of Mints v PJSC National Bank Trust & Anor, can be found here.