OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 10 July 2025 (1)
Case C‑483/23
D,
A,
B,
C,
T
v
Ministero dell’Economia e delle Finanze,
Comitato di Sicurezza Finanziaria,
Agenzia del Demanio
(Request for a preliminary ruling from the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy))
( Reference for a preliminary ruling – Foreign policy – Restrictive measures against the Russian Federation for its actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine – Regulation (EU) No 269/2014 – Freezing of funds or economic resources put into a trust – Recognition of a trust set up in an offshore jurisdiction – Settlor of a trust who has been designated in Annex I to Regulation No 269/2014 – Ownership, possession and holding of the economic resources and funds in the trust – Control of the economic resources and funds in the trust – Trust associated with a sanctioned person )
1.        This reference for a preliminary ruling is set against the backdrop of the European Union’s adoption of restrictive measures against the Russian Federation involving the freezing of economic resources and funds with a view to countering actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.
2.        In short, the referring court wishes to ascertain whether freezing measures may be extended to assets or economic resources put into a trust (2) by a person (the settlor of the trust) designated by name in the list contained in Annex I to Regulation (EU) No 269/2014. (3)
3.        It falls to the Court to determine to what extent a trust may serve as a vehicle for circumventing the application of restrictive measures. The answer to that question will need to take into account the complexity and flexibility of trusts, a legal arrangement which some but not all Member States recognise in their national law.
I.      Legal framework
A.      International law. Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition (4)
4.        In accordance with Article 2 thereof:
‘For the purposes of this Convention, the term “trust” refers to the legal relationships created – inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
A trust has the following characteristics –
(a)      the assets constitute a separate fund and are not a part of the trustee’s own estate;
(b)      title to the trust assets stands in the name of the trustee or in the name of another person on behalf of the trustee;
(c)      the trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed upon him by law.
The reservation by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust.’
5.        The first paragraph of Article 6 states:
‘A trust shall be governed by the law chosen by the settlor. The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary, in the light of the circumstances of the case’.
6.        Article 11 provides:
‘A trust created in accordance with the law specified by the preceding Chapter shall be recognised as a trust.
Such recognition shall imply, as a minimum, that the trust property constitutes a separate fund, that the trustee may sue and be sued in his capacity as trustee, and that he may appear or act in this capacity before a notary or any person acting in an official capacity.
In so far as the law applicable to the trust requires or provides, such recognition shall imply, in particular –
(a)      that personal creditors of the trustee shall have no recourse against the trust assets;
(b)      that the trust assets shall not form part of the trustee’s estate upon his insolvency or bankruptcy;
(c)      that the trust assets shall not form part of the matrimonial property of the trustee or his spouse nor part of the trustee’s estate upon his death;
(d)      that the trust assets may be recovered when the trustee, in breach of trust, has mingled trust assets with his own property or has alienated trust assets. However, the rights and obligations of any third party holder of the assets shall remain subject to the law determined by the choice of law rules of the forum.’
B.      European Union law
1.      Regulation No 269/2014
7.        Article 1 provides:
‘For the purposes of this Regulation, the following definitions apply:
…
(d)      “economic resources” means assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but may be used to obtain funds, goods or services;
(e)      “freezing of economic resources” means preventing the use of economic resources to obtain funds, goods or services in any way, including, but not limited to, by selling, hiring or mortgaging them;
(f)      “freezing of funds” means preventing any move, transfer, alteration, use of, access to, or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or any other change that would enable the funds to be used, including portfolio management;
(g)      “funds” means financial assets and benefits of every kind, including, but not limited to:
…’
8.        Article 2 (5) states:
‘1.      All funds and economic resources belonging to, owned, held or controlled by any natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them, as listed in Annex I, shall be frozen.
2.      No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies, or natural or legal persons, entities or bodies associated with them, as listed in Annex I.’
9.        Article 9 states:
‘It shall be prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent the measures referred to in Article 2.’
2.      Implementing Regulation 2022/336
10.      In accordance with Article 1 thereof, ‘the persons and entity listed in the Annex to this Regulation shall be added to the list set out in Annex I to Regulation (EU) No 269/2014’.
3.      Directive (EU) 2015/849 (6)
11.      Article 3 provides:
‘For the purposes of this Directive, the following definitions apply:
…
(6)      “beneficial owner” means any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:
…
(b)      in the case of trusts, all following persons:
(i)      the settlor(s);
(ii)      the trustee(s);
(iii)      the protector(s), if any;
(iv)      the beneficiaries or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates;
(v)      any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means;
(c)      in the case of legal entities such as foundations, and legal arrangements similar to trusts, the natural person(s) holding equivalent or similar positions to those referred to in point (b);
…’
C.      Italian law
1.      Decreto legislativo 109/2007 (7)
12.      Article 3 created the Comitato di sicurezza finanziaria (Financial Security Committee, Italy), a body within the Ministero dell’Economia e delle Finanze (Ministry of Economy and Finance, Italy), which takes the freezing measures ordered by the United Nations, the European Union and the Ministry of Economy and Finance.
13.      Article 5 contains a prohibition on the transfer, disposal or use of frozen resources and on making funds or economic resources directly or indirectly to or for the benefit of designated entities.
2.      Decreto legislativo 90/2017 (8)
14.      According to the wording contained in the order for reference, Article 2(1) of this Legislative Decree, amending Article 22(5) of Legislative Decree 231/2007, provides:
‘The trustees of express trusts, as governed by Law No 364 of 16 October 1989, as well as persons exercising equivalent rights, powers and authority under similar legal arrangements, shall, in so far as they are established or resident in the territory of the Italian Republic, obtain and keep adequate, accurate and up-to-date information on the beneficial ownership of the trust or similar legal arrangement, such information being understood as that relating to the identity of the settlor(s), of the trustee(s), of the protector(s) or of any other person, if such exists, acting on behalf of the trustee, of the beneficiary or classes of beneficiary and of other natural persons exercising control over the trust or similar legal arrangement and of any other person ultimately exercising control over the assets put into the trust or similar legal arrangement through direct or indirect ownership or by other means’.
3.      Law 364/1989 (9)
15.      By this law, Italy ratified the 1985 Hague Convention.
II.    Facts, dispute and questions referred for a preliminary ruling
16.      Trusts such as the one at issue are not publicised and there is no public register recording their structure and any changes to them. Consequently, the facts of this case must be taken to be those set out by the referring court, supplemented where appropriate by those arising from the documents contained in the case file and from the enquiries carried out by the Italian authorities.
17.      Subject to the final verification that will fall to the referring court, the Court of Justice must start from the facts as so established in order to provide a useful answer to the questions which have been put to it.
18.      The applicant companies B, A, C and D carry on commercial activities in Italy, where they have their registered office. (10) Their capital belongs to a company in Bermuda (11) the assets of which were in turn put into a trust by a natural person (the settlor). (12)
19.      That trust was set up by deed of 18 July 2007. It is governed by the law of Bermuda, a British Overseas Territory. The trust provides for a trustee (13) (first the company H and then the company T) (14) and a protector, who is a third-party natural person. (15) The holders of these positions have changed over time. The managing director of company H (which acted as trustee until 1 April 2021) was also the trust protector from 2014. Previously, a person who had the complete trust of the settlor had been protector. (16)
20.      The beneficiaries of the trust were originally the settlor and his relatives. The trustee and trust protector were also recorded as beneficiaries from the date on which the trust was first established until 2014. Following the adoption by the European Union of sanctions against Russia on account of the annexation of Crimea, the instrument establishing the trust was amended on 28 December 2014. The settlor and two other members of his family remained as beneficiaries. It was provided that the protector could, at his or her discretion, remove and replace the trustee, that the settlor could add other protectors and that the trustee, with the protector’s consent, could add beneficiaries, but only if they were persons not subject to sanctions by the European Union.
21.      By deed of 19 December 2017, the trustee and the protector (17) determined that persons sanctioned by the European Union must be regarded as persons excluded from the trust. Consequently, the sister and a nephew of the settlor were excluded as beneficiaries from the trust.
22.      On 19 June 2019, the managing director of a trust company established in Switzerland (company T) was appointed as trust protector and, on 1 April 2021, as trustee.
23.      The settlor was excluded as beneficiary by deed of 7 February 2022, 21 days before being included by name in Annex I to Regulation No 269/2014, pursuant to Decision (CFSP) 2022/337 and Implementing Regulation 2022/336.
24.      The original protector continued as the sole beneficiary following an amendment made to the trust on 7 February 2022 whereby the settlor was excluded from the group of beneficiaries. At present, the Italian Government is unable to determine with certainty who the beneficiaries of the trust are. At the hearing, the applicants’ lawyers stated that the beneficiaries are a number of charitable institutions.
25.      Companies B, A, C and D had open accounts at a branch of a bank in Milan (Italy). Between 17 April 2013 and 7 June 2017, those companies told the bank that their beneficial owner was the trust settlor.
26.      On 14 March 2022, the Financial Security Committee within the Ministry of Economy and Finance notified the companies B, A, C and D that it had ordered that the equity shares and assets owned by those companies be frozen, in accordance with Article 2 of Regulation No 269/2014 and Legislative Decree No 109/2007, in so far as ‘they can be indirectly attributed [to the settlor]’.
27.      On 11 May 2022, companies B, A, C and D and company T (the trustee) challenged the freezing measure adopted before the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy).
28.      In the dispute before that court:
–        The applicant companies claim, in essence, that the frozen assets fall outside the sphere of influence of the person designated in Annex I to Regulation No 269/2014, that is to say, of the trust settlor. By the act of putting the parent company into the trust, that company’s assets were separated from those of the settlor. Under the trust deed and the applicable legislation, there is no (direct or indirect) power of management and control that is attributable to the settlor, who can no longer exercise his influence.
–        The Italian authorities contend, conversely, that the act of putting assets into a trust, since it does not have the effect of a transfer, does not constitute a complete severance of the relationship between the settlor and the assets in trust. They also rely on Directive 2015/849, Article 3(6)(b)(i) of which includes trust settlors in the category of ‘beneficial owners’. They further note that, even if the settlor is no longer a beneficiary of the trust, the assets in trust may become his property or become available to him ‘again’ if they are not ultimately transferred to the beneficiaries (for example, because the latter waive their right to them or because of the early dissolution of the trust).
29.      It is against this background that the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio) has referred the following questions to the Court of Justice for a preliminary ruling:
‘(1)      Should Article 2(1) of Regulation [No 269/2014] be interpreted as meaning that the freezing measures may also be taken in the event of the transfer of assets or resources to a trust by the settlor indicated in Annex I to the Regulation (designated or listed person), who is to be regarded as the party to whom the asset or those resources belong?
(2)      In the event of a negative reply, [should] Article 2(1) of Regulation [No 269/2014] be interpreted as meaning that the freezing measures may also be taken in the event of the transfer of assets or resources to a trust by the settlor indicated in Annex I to the Regulation (designated or listed person), who is to be regarded as the party associated with the person to whom the asset or resources belong?
(3)      In the event of a negative reply, [should] Article 2(1) of Regulation [No 269/2014] be interpreted as meaning that the freezing measures may also be taken in the event of the transfer of assets or resources to a trust by the settlor indicated in Annex I to the Regulation (designated or listed person), who is to be regarded as the party who controls the asset or the resources?’
III. Procedure before the Court of Justice
30.      The request for a preliminary ruling was registered at the Court of Justice on 26 July 2023.
31.      Written observations have been submitted by the applicant companies, the Belgian, French, Italian, Netherlands and Finnish Governments and the European Commission.
32.      The hearing held on 8 May 2025 was attended by the applicant companies, the Belgian, German and Italian Governments and the Commission.
IV.    Assessment
33.      Before I offer an answer to the questions referred for a preliminary ruling, (18) I should say that, in my opinion, the dispute is best understood in the light of a brief review of the concept of a trust and of the rules governing trusts set up under the law of Bermuda.
A.      General considerations on trusts
34.      A trust is a legal concept developed in common law countries the profile of which is not always easy to determine and the acceptance of which in other States has been a source of some controversy. (19)
35.      In EU law, there are no specific rules governing trusts. However, the Court of Justice has referred to them in disputes concerning taxation and the internal market. In the judgment in Trustees of the P Panayi Accumulation & Maintenance Settlements, (20) it highlighted the following three features of a trust:
–        In common law jurisdictions, the concept of a ‘trust’ involves a triangular transaction, whereby the settlor transfers assets to a person, the trustee, who is required to deal with those assets in accordance with the instrument creating the trust for the benefit of a third person, the beneficiary.
–        Ownership of the assets comprised in the trust is divided into legal ownership and economic ownership, the former held by the trustee, the latter by the beneficiary.
–        Although a trust is legally recognised and has legal effects, it has no separate legal personality and must act through the intermediary of its trustee. Assets comprised in the trust are not part of the property of the trustee. The trustee must deal with those assets as separate property, distinct from his own property. The fundamental duty of the trustee is to comply with the conditions and obligations stipulated in the trust instrument and by the law in general.
36.      The above characterisation of a trust (21) is essentially the same as that contained in the 1985 Hague Convention, Article 2 of which I reproduced above.
37.      The conception of a trust under Article 2 of the 1985 Hague Convention is broad (22) and was designed in this way so as to include trusts under Anglo-Saxon law and related concepts in countries with civil law legal systems, (23) such as the ‘fideicomiso’, the ‘fiducie’ or the German treuhand. This allowed common law countries to ensure that trusts would be recognised in States with civil law legal systems (where trusts did not exist) and the latter States to ensure that their related concepts would be recognised in common law countries. (24)
38.      The 1985 Hague Convention entered into force in January 1992 and only 13 States and Overseas Territories are parties to it. (25)
39.      A trust involves the creation of ‘separate funds’ (26) belonging to the asset owners in the exercise of the autonomous will of the trust creator (the settlor). Those separate funds, which are administered by the trustees, are, in principle, immune from creditors of the settlors, the trustees and the beneficiaries, although there are a small number of exceptions to this. (27)
40.      A trust entails the separation of the ownership, administration and economic benefit of an asset. A trust thus allows for the dissociation of ownership, property use and financial liability. (28)
41.      Because of those characteristics (the pragmatism of their conception, their nature as separate funds, their immunity from creditors, the flexibility in respect of their creation and the confidentiality they may enjoy), trusts have been used both to achieve legitimate objectives (29) and to evade tax, launder money or circumvent international sanctions. (30)
42.      In fact, certain trusts can be described as being purely for appearance (‘sham trusts’) where those involved in creating them seek to give a false impression to third parties by masking the fact that the settlor is, in reality, still the owner of the assets put into the trust.
43.      The risk of this legal arrangement being misused is greatest in the case of trusts created in certain jurisdictions under the law of a third State, (31) which must be recognised in accordance with the 1985 Hague Convention. (32) The features of this type of trust are ‘tailored’ to the needs and wishes of the settlor. (33)
44.      The misuse of trusts explains why Directive 2015/849 addressed them when laying down measures to prevent the use of the financial system for the purposes of money laundering or terrorist financing. Article 3(6) thereof includes in the list of ‘beneficial owners’ all individuals involved in a trust (settlor, trustee, protector, beneficiary), as well as any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means.
45.      As regards the restrictive measures imposed under Regulation No 269/2014, the use of trusts to circumvent its application by persons listed in Annex I thereto has been demonstrated by various analyses. (34) At least one such situation gave rise to the judgment of the General Court of 8 May 2024. (35)
B.      Trusts under the law of Bermuda
46.      The dispute giving rise to these proceedings cannot be separated from the recognition in Italy, pursuant to the 1985 Hague Convention, of a trust created in accordance with the law of Bermuda. Consequently, the substantive rules applicable to that trust are those of Bermuda.
47.      Bermuda’s rules on trusts are based on English law and are set out in specific legislation: the Trusts (Special Provisions) Act 1989 and the Trustee Act 1975, as amended on several occasions, together with the Trusts (Regulation of Trust Business) Act 2011 and the Exemption Order 2002. (36)
48.      According to Section 2(2) of the Trusts (Special Provisions) Act 1989, a trust has the following characteristics in Bermuda:
–        the assets constitute a separate fund and are not part of the trustee’s own estate;
–        title to the trust stands in the name of the trustee or in the name of another person on behalf of the trustee;
–        the trustee has the power and the duty in respect of which he is accountable to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed on him by law.
49.      Section 2(3), added by amendment of 2014, allows the settlor to be a co-beneficiary of the trust and co-trustee. (37) Neither of those two circumstances invalidates the trust or prevents it from taking effect according to its terms or causes the trust property to become part of the estate of the settlor (section 2a(1)).
50.      The law of Bermuda thus offers great flexibility in relation to trusts and considerably favours and protects the position of settlors.
C.      First question referred for a preliminary ruling
1.      Preliminary clarification
51.      The referring court wishes to ascertain whether it is possible to impose a freezing measure in respect of the assets and economic resources put into a trust by a settlor (designated in the list contained in Annex I to Regulation No 269/214) ‘who is to be regarded as the party to whom the asset or those resources belong’.
52.      The Italian authorities state that the settlor is the beneficial owner of the parent company and that the parent company remains under the beneficial owner’s control. The applicant companies’ lawyers disagree with that assessment. (38)
53.      It is for the referring court to determine whether, as a fact relevant to the dispute, the settlor put into the trust the assets of the parent company (established in Bermuda) that owns the companies whose assets and resources have been frozen.
54.      For the purposes of the preliminary ruling, the Court has no option but to start from the assumption that this (the parent company’s assets having been put into the trust) is the case. That assumption is supported by at least two factors:
–        First, the companies operating in Italy recognised, between 17 April 2013 and 7 June 2017, that their beneficial owner was the settlor of the trust.
–        Second, the referring court states that the natural person listed in Annex I to Regulation No 269/2014 (the settlor) created the trust into which he put the parent company in control of the applicant companies. The referring court is thus saying that the settlor put the assets and economic resources at issue into the trust. Having established that premiss, it wishes to ascertain whether the settlor’s relationship with those assets and resources is that of an owner (first question referred for a preliminary ruling). (39)
2.      Answer to the question
55.      Having thus established where the focus of the dispute lies, I must now address the argument put forward by the German Government at the hearing, on which the other parties and interveners also commented.
56.      According to the German Government, restrictive measures may be imposed on the companies controlled by the settlor of the trust only if such companies are expressly included in the list of persons, entities and bodies contained in Annex I to Regulation No 269/2014. It supports that proposition by reference to arguments similar to those relied on in the judgment of the General Court in Melli Bank v Council, (40) which, in my opinion, the Court of Justice did not later endorse. (41)
57.      The German Government’s argument could potentially be accepted in the case of companies with persons subject to restrictive measures as non-majority shareholders (exercising partial control over them). Conversely, that argument is not acceptable when it comes to applying restrictive measures to companies wholly owned or controlled by the person listed in Annex I to Regulation No 269/2014.
58.      In the case of companies wholly owned (or controlled) by a natural person listed in Annex I to Regulation No 269/2014, there is, to my mind, no need for each of those companies to be named on that list for the purposes of the application of Article 2 of Regulation No 269/2014. Including their names would make the work of the EU legislature extremely difficult and would undermine the speed and surprise effect with which restrictive measures are to be implemented. (42)
59.      It is sufficient, in my opinion, for a company’s entire capital to belong to (or be controlled by) the natural person designated on the list contained in Annex I to Regulation No 269/2014 for that asset automatically to come under the heading of all of the freezable funds and economic resources of that natural person. (43)
60.      The decisive provision for the purposes of answering the first question referred for a preliminary ruling is Article 2(1) of Regulation No 269/2014: ‘All 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’.
61.      That provision has a very broad scope, both objectively (assets and resources capable of being frozen) and subjectively (natural and legal persons whose relationship with those assets consists in owning, possessing, holding or controlling them). The definitions of ‘freezing of economic resources’ and ‘freezing of funds’, contained in points (e) and (f) of Article 1 of Regulation No 269/2014, are also broad.
62.      The EU legislature’s objective in giving such a broad definition to the link between the person (against whom the restrictive measure is taken) and the assets is to ensure that all of that person’s funds and economic resources are frozen. That measure will prevent the person concerned from obtaining economic benefits (from those funds and resources) and from having recourse to mechanisms enabling him or her to evade its impact. (44)
63.      The question is whether, in a case such as the one at issue here, the settlor of the trust, who puts into who contributes certain assets or economic resources previously owned by him or her, continues to have one of the legal relationships with them which, in accordance with Regulation No 269/2014, trigger their compulsory freezing.
64.      It is of course for the referring court to determine the exact position of the trust settlor in this dispute. Given that the configuration of trusts is very diverse, flexible and variable, they must be assessed on a case-by-case basis. That assessment is undoubtedly made more difficult by their opacity and the fact that they are not publicised. Although it is for the referring court to carry out that assessment, the Court can offer it some useful guidance.
65.      Article 2(1) of Regulation No 269/2014 does not define but lists certain legal concepts. Neither does it refer to other provisions of EU law or to national legal systems. These are, therefore, autonomous concepts of EU law that require a uniform interpretation applicable in all of the Member States.
66.      In order to arrive at such a uniform interpretation, regard must be had to the wording of that provision, its context and the objective pursued by the rules of which it forms part. (45)
3.      Criterion as to wording
67.      A grammatical interpretation of Article 2(1) of Regulation No 269/2014 is not readily apparent on account of the differences between the language versions. (46) Some refer to four types of relationship (the Italian-language version uses the terms ‘appartenenti a, posseduti, detenuti o controllati’ and the French-language version uses ‘appartenant aux, possèdent, détiennent, contrôlent’), while others reduce these to three (the Spanish-language version mentions only ‘propiedad, tenencia o control’).
68.      To my mind, those language versions do not contradict but complement each other. In all of them, there are at least three types of relationship between the persons and the assets or economic resources which are to be frozen: ownership (‘appartenant à’; ‘belonging to’; ‘appartenenti à’); possession or mere holding (‘possèdent’, ‘détiennent’; ‘owned’, ‘held’; ‘posseduti’, ‘detenuti’), and control (‘contrôllent’; ‘controlled’; ‘controllati’).
69.      The notions of ownership and possession are proximate and closely related, in that they are predicated on a direct legal relationship between the persons and their assets, whereas control may be more indirect. All of those classes of relationship are the same, however, in that they extend the link which a person may have with the assets concerned beyond mere title to them, thereby warranting the freezing of those assets. (47)
4.      Criteria as to context and purpose
70.      In determining whether, for the purposes of the application of Regulation No 269/2014, assets or economic resources put into a trust continue to be owned or held (possessed) by the settlor, regard must be had to the objective pursued by that regulation and the relationship between the latter and other instruments of EU law.
71.      From the point of view of the purpose of that regulation, the interpretation I shall be proposing is consistent with the objective behind the provisions adopted by the European Union with a view to imposing restrictive measures on persons linked to the Russian leadership for the aggression perpetrated against Ukraine. (48) That objective would be frustrated by any authorisation of the use of legal arrangements which, through mechanisms of varying degrees of sophistication, allow those persons to circumvent the effective implementation of such measures.
72.      The teleological criterion thus favours an extensive interpretation of the classes of asset reflected in Article 2(1) of Regulation No 269/2014 that lends itself to ensuring that the assets corresponding to the persons listed in Annex I thereto can be frozen.
73.      A schematic analysis must start from the premiss that, in general, trusts allow for a separation or disconnection as between legal and beneficial ownership (49) of assets. The complex structure and opacity of trusts make it difficult to identify the beneficial owners of the assets put into them and make necessary further efforts to determine the true nature of the relationship under the trust. What is more, the risk of trusts being misused increases when trusts are set up in foreign jurisdictions. (50)
74.      It will therefore be essential to take into account the specific provisions of EU law on any circumvention of restrictive measures by trusts or similar legal arrangements. From a schematic point of view, the anti-money-laundering provisions adopted by the EU may also be useful. I shall analyse both below.
(a)    Trusts as a means of circumventing restrictive measures
75.      Article 9 of Regulation No 269/2014 prohibits the knowing and intentional participation in activities the object or effect of which is to circumvent restrictive measures to freeze financial resources and funds which are adopted against natural and legal persons listed in Annex I to that regulation.
76.      As I have already explained, trusts can be used relatively easily to avoid the freezing of economic resources and funds. This is noted by the Commission in the Guidance for economic operators on Russia sanctions circumvention. (51)
77.      That fact explains the adoption of specific provisions of EU law aimed at preventing the use of trusts as means of circumventing the implementation of restrictive measures:
–        Article 1(1) and (2) of Decision 2014/512/CFSP, (52) imposes a prohibition on registering, providing a registered office, business or administrative address as well as management services to, a trust or any similar legal arrangement having as a settlor or a beneficiary several classes of person (including Russian nationals or natural persons resident in Russia, legal persons, entities or bodies established in Russia or directly or indirectly controlled by Russian nationals). It also prohibits those persons from acting as trustees or performing similar roles.
–        Article 3(1) of Directive (EU) 2024/1226 (53) lays down minimum rules for the definition of criminal offences and penalties for the violation of Union restrictive measures. It states that it is to be a criminal offence to circumvent a Union restrictive measure (54) by using, transferring to a third party or otherwise disposing of funds or economic resources directly or indirectly owned, held or controlled by a designated person, entity or body, which are to be frozen pursuant to a Union restrictive measure, in order to conceal those funds or economic resources. To my mind, this offence was designed, inter alia, to combat the use of trusts and related legal arrangements as vehicles for circumventing restrictive measures.
(b)    Rules on money laundering
78.      A schematic and purposive interpretation of Article 2(1) of Regulation No 269/2014 in relation to trusts is made easier by rules of EU law that, although adopted outside the particular sphere of restrictive measures, are aimed at preventing the use of the financial system for money laundering.
79.      This is because the circumvention of restrictive measures can be achieved by using the same devices, schemes and legal mechanisms as are referred to in Directive 2015/849. This seeks to prevent flows of illicit money from being able to damage the integrity, stability and reputation of the financial sector and threaten the internal market of the European Union as well as international development. (55)
80.      One of the key concepts of Directive 2015/849 (56) is that of the ‘beneficial owner’ of assets. Thus, Article 3(6)(b) (57) lays down an obligation to classify as ‘beneficial owners’, in the case of trusts, five classes of person including, in the first place, settlor(s). According to Article 31(1) of that directive, as amended by Directive 2019/2177, that same obligation extends to legal arrangements which have a structure or functions similar to trusts.
81.      It is true that Article 3 of Directive 2015/849 includes those definitions for the purposes of the application of that directive and that the purpose of the latter is confined to the combating of money laundering. From the point of view of a schematic interpretation of EU law, however, the fact that the settlor of a trust is identified as a ‘beneficial owner’ of assets (58) may be used to interpret similar concepts in the legislation aimed at combating another form of conduct as illegitimate as money laundering, that is to say, the act of having actively lent material or financial support to the Russian politicians responsible for the annexation of Crimea or the aggression against Ukraine. (59)
(c)    Interim conclusion
82.      In summary, a systematic (contextual) and purposive interpretation of Article 2(1) of Regulation No 269/2014, read in the light of other provisions concerning this type of restrictive measure and the more general rules on money laundering, supports the assertion that the settlor of a trust is, in principle, capable of falling within the scope of the legal situations for which Article 2(1) thereof provides.
83.      On that basis, it will be necessary to assess the factual circumstances of each trust and of the persons involved in it in order to determine whether it has been used as a means of circumventing restrictive measures. This assessment is, as I have said, a matter for the national court, to which the Court of Justice may wish to give the guidance I am about to propose below.
5.      Relationship between the settlor and the economic resources put into the trust
84.      It is for the referring court to ascertain what type of relationship exists between the settlor and the assets put into the trust and to determine whether the trust may have been used to circumvent the restrictive measures imposed under Regulation No 269/2014.
85.      The dispute giving rise to these proceedings concerns a classic private international law situation, namely, the recognition in Italy under the provisions of the 1985 Hague Convention of a trust set up in accordance with the law of Bermuda.
86.      The law applicable to the trust is that of Bermuda, a fact not disputed by the parties. Article 6 of the 1985 Hague Convention provides that ‘a trust shall be governed by the law chosen by the settlor’ and Article 8 thereof that that law ‘shall govern the validity of the trust, its construction, its effects and the administration of the trust’.
87.      Regard must therefore be had to the conditions which the 1985 Hague Convention attaches to the recognition of trusts, in particular those contained in Articles 2 and 11 thereof. Under the latter provision, Italy is obliged to recognise a number of effects produced by trusts in so far as these are provided for in the law of Bermuda.
88.      To my mind, Italian law and Italian case-law concerning trusts, which the referring court mentions in its order, cannot disregard the fact that the substantive provisions applicable to the trust in this case are those of the law of Bermuda. The assessment, as a matter of fact, of the relationship between the settlor and the assets in that trust must be carried out in accordance with those provisions.
89.      According to section 2(2) of the Trusts (Special Provisions) Act 1989, trusts in Bermuda have the customary characteristics of that legal arrangement. However, Bermudian law is very flexible and protective of the settlor, conferring on him or her a number of prerogatives which, to my mind, enable him or her to continue to be the ‘beneficial owner’ of the assets put into the trust.
90.      Of those prerogatives, which do not preclude the creation of a trust (60) and are recognised by the law of Bermuda, (61) the referring court may take into account (and verify whether the settlor has exercised) the following:
–        The settlor has the power to revoke the trust in whole or in part. In that event, the assets would revert to forming part of the settlor’s estate. (62) As the Italian Government argues, this statutory provision shows that the settlor has ‘beneficial title’ to the trust assets.
–        The settlor retains the power to give binding directions in connection with the purchase, holding, sale or other commercial or investment dealings with trust property or any investment or reinvestment thereof or the exercise of any powers or rights arising from such trust property.
–        The settlor has the right to appoint, add, remove or replace any trustee or protector of the trust.
–        The settlor has the power to add, remove or exclude a beneficiary or class of beneficiaries, and the right to make himself a co-beneficiary of the trust.
91.      Taken together, these characteristics make it clear that the settlor of a trust governed by the law of Bermuda may maintain with the assets and economic resources which he or she has put into that trust a relationship whereby that person is capable of becoming the ‘beneficial owner’ of the assets held in trust. Such a relationship falls within the scope of Article 2(1) of Regulation No 269/2014 for the purposes of the application of a freezing measure to those assets and resources.
92.      In the light of the foregoing, I am able to suggest the following answer to the first question referred for a preliminary ruling: depending on the specific terms of the instrument of settlement, or any amendments to it, and the law applicable to a particular trust, there is nothing to prevent the economic resources and funds put into that trust from continuing to be regarded as being owned or possessed by the settlor for the purposes of Article 2(1) of Regulation No 269/2014.
D.      Second question referred for a preliminary ruling
93.      Given that my proposed answer to the first question from the referring court is in the affirmative, there is no need to analyse the second question referred for a preliminary ruling, formulated in the event that the answer to the first is in the negative. I shall, in any event, answer it in the alternative.
94.      By its second question, the referring court wishes to ascertain whether, if the settlor were not the person to whom the asset (held in trust) belongs, Article 2(1) of Regulation No 269/2014 would be applicable, since that asset would belong to another person ‘associated’ with him or her (the settlor).
95.      In the view of the referring court, the mention of associated natural persons may be construed as a reference to ‘situations such as that at issue, in which the asset, although not attributable by name to the person listed in Annex I [to Regulation No 269/2014], continues to have a significant link with that person, at least until such time as the asset is transferred to the beneficiaries’.
96.      The referring court goes on to say that, ‘in the case of a trust, the associated person would quite obviously be the trustee, who administers the assets in trust in the interests of the settlor. That the trust is governed at all times by the scheme included in the instrument of settlement does not alter the fact that this was the scheme that the settlor wanted in order to realise his or her own interests and that the trust administrators … are chosen by the settlor or, in any event, by the persons designated in the instrument of settlement’.
97.      Those considerations support the inference that, in the view of the referring court, there may be – between the settlor and the trustee – a significant legal link that will allow both of them to be classified as associated persons within the meaning of Article 2(1) of Regulation No 269/2014.
98.      The criterion of ‘association’ is often used in acts of the Council concerning restrictive measures but it is not defined as such and its meaning depends on the different contexts and circumstances. It may be understood as referring to natural or legal persons generally united by common interests without necessarily being engaged in a shared economic activity. Usually, that concept will imply the existence of a link going beyond a mere family relationship. (63)
99.      However, as the Commission and several of the governments having intervened in the proceedings have noted, when Article 2(1) of Regulation No 269/2014 refers to ‘natural or legal persons, entities or bodies associated with them’, it requires that they be ‘listed in Annex I’.
100. Listing in Annex I to Regulation No 269/2014 is therefore an essential condition for the adoption of a measure to freeze funds and economic resources in respect of an ‘associate’ of a natural or legal person. (64)
101. It is nonetheless open to question whether the requirement that associated persons must also be listed in Annex I is consistent with the objectives underlying the extension of the subjective scope of the restrictive measures, as provided for in Article 2(1) of Regulation No 269/2014.
102. From that point of view, one can understand the interpretation proposed by the Italian Government, to the effect that, while there is no doubt that the fact that a person is listed in Annex I to Regulation No 269/2014 allows the restrictive measures to be applied automatically, those measures can still be implemented if there is proof of the existence of a link by association, even in the absence of any such listing.
103. However attractive that interpretation may be, under the law as it stands, the wording of the provision concerned does not allow it. The application of restrictive measures on the basis of a link by association requires that the associated person or entity be expressly listed in Annex I to Regulation No 269/2014.
104. According to the referring court, in the trust at issue, there is an association between the settlor and the trustee, but the latter is not listed in Annex I to Regulation No 269/2014.
105. In the absence of such an express listing, the close relationship between the settlor and the trustee or the protector would have to be examined under the headings of ownership or possession, which were analysed in the answer to the first question referred for a preliminary ruling, or control, which I shall address in the answer to the third question.
106. I therefore take the view that freezing measure can be taken in respect of economic resources or funds put into a trust if the ‘associated’ person is listed in his or her own right in Annex I to Regulation No 269/2014.
E.      Third question referred for a preliminary ruling
107. Again in the alternative, the referring court wishes to ascertain, in the event that the answers to the first and second questions are in the negative, whether Article 2(1) of Regulation No 269/2014 would be applicable in so far as the settlor controls the assets or resources which he or she has put into the trust.
108. Since I have suggested that the first question be answered in the affirmative, there is no need to consider the third. I shall do so, however, in the event that the Court takes a different view in relation to the first question.
109. The inclusion in Article 2(1) of Regulation No 269/2014 of a reference to the ‘control’ of funds and economic resources supplements the criteria as to the ownership and possession of such assets and resources. Its inclusion reflects the EU legislature’s intention of closing the circle of potential scenarios and thus avoiding any circumvention of the restrictive measures.
110. The asset control criterion serves to overcome the use of legal devices and schemes whereby the owner of the assets or resources transfers their ownership to third parties but continues to decide how they are used and for what purpose. It is, moreover, particularly suitable for ensuring that trusts set up in foreign jurisdictions are not used as a means of circumventing EU restrictive measures.
111. The Commission and the Council have given the competent authorities of the Member States interpretative guidelines for the implementation of restrictive freezing measures. In particular, the Commission has identified a number of factors or criteria (65) which should be taken into account in order to determine whether an entity is controlled by another person or entity, that is to say, whether the latter can and does assert a decisive influence on the conduct of the former. (66)
112. I shall focus on the analysis of some of those criteria, which I consider relevant. They will not always lend themselves to being applied to trusts but some are useful in determining whether the settlor retains control over the funds and economic resources which he or she has put into the trust. Once again, it will ultimately fall to the referring court to establish whether that is the case here.
113. The first of those criteria is ‘the power to appoint or remove a majority of the members of the administrative, management or supervisory body’ of the controlled legal person or entity. In the case of trusts, depending on how the trust is configured, the settlor controls those who participate in it: he or she appoints and can change the trustee, just as he or she can appoint and change the protector. In other words, the ‘long shadow’ or longa manus of the settlor will, in some cases, allow him or her to exercise his or her influence on those who administer the trust, who will continue in their role at the settlor’s discretion.
114. Something similar is true of the criterion of ‘having influence as regards corporate strategy, operational policy, business plans, investment, capacity, provision of finance, human resources and legal matters’. The settlor can predetermine those elements in the instrument of settlement, which is binding on the trustee when it comes to managing and administering the trust assets. What is more, it is customary for the settlor to appoint a trustee in his or her absolute confidence, with the result that there is nothing to prevent the settlor from giving the trustee instructions on how to administer the trust without needing to publicise those instructions in any way. The settlor can also include in the instrument of settlement a duty to provide him or her with regular information on the administration of the trust.
115. As I have already noted, the law of Bermuda confers extensive powers on the trust settlor, who may co-administer the trust with the trustee and change the person or company designated by him or her to discharge that function. It is for the referring court to establish whether such circumstances, which constitute evidence of the fact that the settlor controls the management of the assets in the trust, are present in this case.
116. An additional (and indirect) indication of the exercise of control by the settlor is if the economic resources and assets in the trust are used in connection with activities of which the settlor himself or herself is effectively the main or sole recipient or beneficiary. (67)
117. Control is also in evidence in the ability of the settlor to establish additional supervisory mechanisms. In particular, he or she can appoint a trust protector to ensure that the resources and funds are properly administered. Finally, the provision allowing the trust to be revoked if the objectives set out in the instrument of settlement are not achieved confers a control of last resort on the settlor.
118. In short, the law of Bermuda, particularly following the 2014 amendments to the Trusts (Special Provisions) Act 1989, confers considerable prerogatives on settlors, who are able to reserve significant powers to control the trust.
119. I would add that, as the referring court suggests, (68) the changes made to the trust at issue since it was set up, even if geared towards reducing the settlor’s powers, seem to lie at the latter’s discretion and to offer further evidence of his or her powers of control. Those changes would not alter but only reinforce the capacity of the settlor to exert direct or indirect control over the assets that he or she has put into the trust by replacing the trustees or protectors with other persons in his or her confidence.
120. There is therefore nothing to prevent the settlor from maintaining control, within the meaning of Article 2(1) of Regulation No 269/2014, over the funds and economic resources which he or she has put into a trust by exercising decisive influence (69) on them. It will be for the referring court, as I have already said, to verify whether that is the case here.
V.      Conclusion
121. In the light of the foregoing, I suggest that the answer to be given to the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy) should be as follows:
Article 2(1) of Council Regulation 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, as amended by Council Regulation (EU) No 476/2014 of 12 May 2014, and implemented by Council Implementing Regulation (EU) 2022/336 of 28 February 2022,
must be interpreted as meaning that depending on the specific terms of the instrument of settlement, or any amendments to it, and the law applicable to a particular trust, there is nothing to prevent the economic resources and funds put into that trust from continuing to be regarded as being owned or merely held by the settlor for the purposes of Article 2(1) of Regulation No 269/2014.
1      Original language: Spanish.
2      I shall adopt the English term ‘trust’ in preference to other terms denoting concepts which, although related, are not necessarily identical (‘fideicomiso’, for example).
3      Council Regulation of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2014 L 78, p. 6), as amended by Council Regulation (EU) No 476/2014 of 12 May 2014 (OJ 2014 L 137, p. 1), and implemented by Council Implementing Regulation (EU) 2022/336 of 28 February 2022 (OJ 2022 L 58, p. 1). Trust settlors were included in the list contained in Annex I pursuant to Council Decision (CFSP) 2022/337 of 28 February 2022 amending Decision 2014/145/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2022 L 59, p. 1), and Implementing Regulation 2022/336.
4      ‘The 1985 Hague Convention’. English text available at https://assets.hcch.net/docs/8618ed48-e52f-4d5c-93c1-56d58a610cf5.pdf.
5      As worded following the amendment introduced by Regulation No 476/2014.
6      Directive of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ 2015 L 141, p. 73), as amended by Directive (EU) 2019/2177 of the European Parliament and of the Council of 18 December 2019 (OJ 2019 L 334, p. 155).
7      Decreto legislativo 22 giugno 2007, n. 109 – Misure per prevenire, contrastare e reprimere il finanziamento del terrorismo e l’attività dei Paesi che minacciano la pace e la sicurezza internazionale, in attuazione della direttiva 2005/60/CE (Legislative Decree No 109 of 22 June 2007 on measures to prevent, combat and suppress terrorist financing and the activities of countries that threaten international peace and security, implementing Directive 2005/60/EC) (GURI No 172 of 26 July 2007).
8      Decreto legislativo 25 maggio 2017, n. 90 – Attuazione della direttiva (UE) 2015/849 relativa alla prevenzione dell’uso del sistema finanziario a scopo di riciclaggio dei proventi di attività criminose e di finanziamento del terrorismo e recante modifica delle direttive 2005/60/CE e 2006/70/CE e attuazione del regolamento (UE) n. 2015/847 riguardante i dati informativi che accompagnano i trasferimenti di fondi e che abroga il regolamento (CE) n. 1781/2006 (Legislative Decree No 90 of 25 May 2017 on the implementation of Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directives 2005/60/EC and 2006/70/EC and Regulation (EU) No 2015/847 on information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006) (GURI No 140 of 19 June 2017, Ordinary Supplement No 28).
9      Legge 16 ottobre 1989, n. 364 – Ratifica ed esecuzione della convenzione sulla legge applicabile ai trusts e sul loro riconoscimento, adottata a L’Aja il 1º luglio 1985 (Law No 364 of 16 October 1989 on the ratification and implementation of The Hague Convention of 1 July 1985 on the Law applicable to trusts and on their recognition) (GURI No 261 of 8 November 1989, Ordinary Supplement No 84).
10      The companies B and A, together with the Cypriot company N, own luxury mansions in Arzachena, on the Costa Esmeralda, Sardinia. Company C operates in the car rental business and company D in the business of providing tourist services. Up until the freezing measure was adopted, the aforementioned mansions had always been rented exclusively to the settlor of the trust.
11      The applicant companies acknowledge as much in their written observations (paragraph 1): the parent company registered in Bermuda owns all of the shares in the four companies.
12      With regard to the relationship between the settlor and the assets transferred to the parent company, see points 51 to 54 of this Opinion.
13      I use this English term instead of the Spanish term ‘fideicomisario’. As I shall explain at length, the trustee manages and administers the assets put into the trust, in accordance with the provisions of the trust deed, and transfers the assets in trust to the beneficiaries when the trust is closed.
14      Company T became a trustee on 1 April 2021, that position having previously been held by company H, according to the information provided by the Italian Government in its written observations, paragraphs 4 and 10.
15      The protector’s role is to ensure that the arrangements provided for under the trust are correctly implemented.
16      Between 2006 and 2013, that person was the managing director of a Russian company owned by the trust settlor and operating in the steel and mining sectors. Since 2013, he has been the managing director of another Russian company in control of companies in which the trust settlor and his relatives are the main shareholders.
17      Another person in the settlor’s confidence performed the role of protector between 2014 and 2021.
18      In its written observations, the Italian Government had argued that the reference for a preliminary ruling is inadmissible under Article 275 TFEU. At the hearing, however, it expressly waived its objection of inadmissibility in the light of the rule laid down by the Court in the judgment of 10 September 2024, Neves 77 Solutions (C‑351/22, EU:C:2024:723, paragraph 39).
19      Hayton, D., ‘Trust in Private International Law’, Recueils de cours, Académie de droit international, 2013, pp. 9 to 98; Hayton, D. and others (eds), Principles of European Trust Law, Kluwer, 1999; Noseda, F., ‘Unpacking the trust concept: closing the common law-civil law gap’, Trust & Trustees, 2024, pp. 1 to 9.
20      Judgment of 14 September 2017 (C‑646/15, EU:C:2017:682), paragraphs 3 to 5.
21      Book X.–1:201 of the Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR) offers the following definition: ‘A trust is a legal relationship in which a trustee is obliged to administer or dispose of one or more assets (the trust fund) in accordance with the terms governing the relationship (trust terms) to benefit a beneficiary or advance public benefit purposes’.
22      Article 3 of the 1985 Hague Convention nonetheless limits its applicability to trusts created voluntarily and evidenced in writing.
23      Von Overbeck, A.E., ‘Rapport explicatif sur la Convention de La Haye de 1985 relative au trust’ (explanatory report), in Actes et documents de la Quinzième session (1984), Vol. II, Trusts – loi applicable et reconnaissance, The Hague, Imprimerie Nationale, 1985, pp. 370 to 415.
24      The purpose of the 1985 Hague Convention was not to introduce the concept of trusts into countries where it was unknown but only to encourage its recognition.
25      The States Parties applying the Convention include five EU Member States (Cyprus, Italy, Luxembourg, Malta and the Netherlands). France signed the Convention but has not ratified it and the European Union is not a party to it. The United Kingdom and Bermuda, as a British Overseas Territory, are parties to it. Alongside other common law countries (Australia, Canada and the United States, which has signed it but not yet ratified it), States or micro-States operating as financial centres (Liechtenstein, Monaco, Panama, San Marino and Switzerland) are also parties to the Convention. The States Parties in which the Convention applies can be consulted at https://www.hcch.net/en/instruments/conventions/status-table/?cid= 59.
26      This is the term used in Article 2 of the 1985 Hague Convention.
27      The trust property is removed from any action on the part of the personal creditors of the settlor, the trustee and the beneficiary. The beneficiary’s creditors may pursue their claims only against the trust, but not if the trust is discretionary, protective or spendthrift. As regards the governance of that separate estate, that is to say, the relations between the settlor, the trustee and the beneficiary, the trust is subject to rules similar to varying degrees to those governing contracts of mandate, commission and agency.
28      See Hansmann, H. and Mattei, U., ‘The Functions of Trust Law: A Comparative Legal and Economic Analysis’, New York University Law Review, Vol. 73, 1998, p. 434.
29      Transferring the administration of an asset to a third party to organise an inheritance; protecting assets for children, classes of family members or vulnerable adults; managing in common an asset for a pool of corporations; financing charity through an intermediary gathering funds; and investing money with the view to finance an important expense in the future (for example education fees or retirement). See FATF and Egmont Group, Concealment of Beneficial Ownership, July 2018, available at https://www.fatf-gafi.org/content/dam/fatf-gafi/translations/reports/SPANISH-FATF-Egmont-Concealment-Beneficial-Ownership.pdf.
30      See the works of the Financial Action Task Force (FATF), in particular, FATF, Guidance on Beneficial Ownership and Transparency of Legal Arrangements, Paris, 2024, available at https://www.fatf-gafi.org/content/dam/fatf-gafi/recommendations/Guidance-Beneficial-Ownership-Transparency-Legal-Arrangements.pdf.coredownload.inline.pdf.
31      FATF and Egmont Group, Concealment of Beneficial Ownership, July 2018, paragraph 50.
32      Legal literature speaks of ‘offshore-inspired trusts’ and highlights the inappropriate use of trusts for tax evasion and money laundering. See, inter alia, Samet, I., ‘On trust, hypocrisy and conscience’, The Cambridge Law Journal, Vol. 83, No 1, 2024, pp. 158 to 183; Dagan, H. and Samet, I., ‘What’s Wrong with Massively Discretionary Trusts’, Law Quarterly Review, Vol. 138, 2022, p. 624; and Smith, L., ‘Massively Discretionary Trusts’, Trusts & Trustees, Vol. 25, 2019, p. 397.
33      Even lawyers in certain offshore jurisdictions advertise this type of advantage, as can be seen, for example, in ‘Best Offshore Trust Jurisdiction – a Comparison’, available at https://www.offshorecorporation.com/trust/.
34      According to the Multilateral Repo Task Force, ‘Global Advisory on Russian Sanctions Evasion’, 9 March 2023, p. 3, available at https://finance.ec.europa.eu/system/files/2023-03/230309-repo-global-advisory_en.pdf, ‘specifically, REPO members have discovered trust arrangements that may have been designed to thwart sanctions enforcement. These arrangements may indicate that everyone involved in the trust – including law firms, grantors (also defined as protectors), trustees, settlors, and beneficiaries – may be involved in sanctions evasion. In some instances, sanctioned Russians individuals and entities and their proxies may involve relatives and close associates in these legal structures and arrangements to further obfuscate their ownership or relation to the assets. It is not uncommon for these legal entities and arrangements to be located in jurisdictions that are tax or corporate formation havens, which may afford a degree of secrecy to Russian elites and their proxies’.
35      Ismailova v Council (T‑234/22, EU:T:2024:287), paragraphs 136 to 153. That judgment was the subject of an appeal in Case C‑506/24 P, still pending.
36      The up-to-date texts of these provisions are available at https://www.bermudalaws.bm/search/*/SPContentType:%C7%82%C7%82436f6e736f6c696461746564204c6177.
37      Section 2(3), as amended by 2014: 22 s. 2, in force since 16 July 2014: ‘The reservation or grant by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust’.
38      According to the applicant companies’ lawyers, the parent company is itself owned by company T, a trust company governed by Swiss law, established in Switzerland and the current trustee of the trust.
39      See, in particular, the order for reference (page 8 of the original anonymised Italian: ‘the issue raised in this reference for a preliminary ruling concerns whether the assets, resources and relations transferred [to the trust] may be construed as “belonging” to the settlor, even if the latter is not the user or manager of the assets transferred or the beneficial owner of them, or to a person “associated” with the settlor or ultimately “controlled” by the settlor himself, with the consequence that, in the case of assets put into the trust by the (designated or listed) settlor, the freezing measures provided for in Article 2(1) of [Regulation No 269/2014] can be applied’.
40      Judgment of 9 July 2009, Melli Bank v Council (T‑246/08 and T‑332/08, EU:C:2009:266, paragraph 146).
41      Judgment of 13 March 2012, Melli Bank v Council (C‑380/09 P, EU:C:2012:137, paragraph 76 et seq.)
42      The need to list companies wholly owned (or controlled) by a natural person in Annex I to Regulation No 269/2014 would cause the same rule to be extended to other asset types, meaning that each and every one of the assets over which that person exercises ownership or control would also have to be identified and listed. Logically, that interpretation of Article 2 of Regulation No 269/2014 must be rejected.
43      At the hearing, the German Government recognised that freezing the assets of a company not listed in Annex I to Regulation No 269/2014 was feasible in the case where a person who is listed in turn owns, holds or controls those assets.
44      The judgment of 11 November 2021, Bank Sepah (C‑340/20, EU:C:2021:903, paragraph 56), stated that, in order to achieve the aims of the restrictive measures, it is not only legitimate but indispensable that the definitions of the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ should be interpreted broadly because what is at stake is preventing any use of frozen assets that would enable the regulations at issue to be circumvented and the weaknesses in the system to be exploited.
45      Judgments of 16 January 2025, VB II (Information concerning the right to a new trial) (C‑400/23, EU:C:2025:14, paragraph 40), and of 30 November 2021, LR Ģenerālprokuratūra (C‑3/20, EU:C:2021:969, paragraph 79).
46      The English- (‘belonging to, owned, held, controlled’), German- (‘Eigentum’, ‘Besitz’, ‘gehalten’, ‘kontrolliert’), French- (‘appartenant aux, possèdent, détiennent, contrôlent’), Italian- (‘appartenenti a, posseduti, detenuti, controllati’), Portuguese- (‘pertencentes, na posse ou que se encontram à disposição ou sob controlo’), Romanian- (‘aparțin, se află în proprietatea ori posesia sau sunt controlate’) and Dutch-language versions (‘toebehoren aan, eigendom, bezit, zeggenschap’) use four different terms. The Spanish-language version mentions only three terms: ‘propiedad’, ‘tenencia’ and ‘control’. What is more, the German- and Spanish-language versions do not contain a term clearly equivalent to ‘appartenenti a’, which is present in the English-, Portuguese- and French-language versions.
47      See, by analogy, judgment of 10 September 2019, HTTS v Council (C‑123/18 P, EU:C:2019:694, paragraph 69): ‘The use by Regulation No 961/2010 of the terms “owned” and “controlled” reflects the need to enable the Council to adopt effective measures against all persons, entities or bodies linked to companies involved in nuclear proliferation. It follows that the ownership or control may be direct or indirect. If that link had to be established solely on the basis of the direct ownership or control of those persons, the measures could be circumvented by numerous contractual or de facto possibilities of control, possibilities which would confer on a company opportunities to exert influence over other entities that are as extensive as in the case of direct ownership or control’. The Court went on to say (in paragraph 70) that the concept of ‘company owned or controlled by another entity’ does not have, in the area of restrictive measures, the same meaning as it generally has in company law, where it serves to identify the commercial liability of a company which is legal subject to the control, as regards decision-making, of another commercial entity.
48      In the words of the Court of Justice, ‘the importance of the objectives pursued by the contested acts, namely the protection of Ukraine’s territorial integrity, sovereignty and independence and the promotion of a peaceful settlement of the crisis in that country, the achievement of which … is part of the wider objective of maintaining peace and international security, in accordance with the objectives of the Union’s external action stated in Article 21 TEU, is such as to justify the possibility that, for certain operators, the consequences may be negative, even significantly so’. Judgments of 28 March 2017, Rosneft (C‑72/15, EU:C:2017:236, paragraph 150), and of 17 September 2020, Rosneft and Others v Council (C‑732/18 P, EU:C:2020:727, paragraph 85).
49      Article 3(6)(b) of Directive 2015/849 refers to the concept of the ‘beneficial owner’ of assets put into a trust.
50      Document COM(2020) 560 final of 16 September 2020, Report from the Commission to the European Parliament and the Council assessing whether Member States have duly identified and made subject to the obligations of Directive (EU) 2015/849 all trusts and similar legal arrangements governed under their laws, p. 4.
51      European Commission, Guidance for EU operators: Implementing enhanced due diligence to shield against Russia sanctions circumvention, 7 September 2023, p. 9. It regards as clear indications of circumvention (‘red flags’) the use of ‘complex corporate or trust structures linked to countries friendly to Russia or whose complexity is not justified by the business profile of the customer … [and the] use of trust arrangements or complex corporate structures involving offshore companies’. Document available at https://finance.ec.europa.eu/system/files/2023-12/guidance-eu-operators-russia-sanctions-circumvention_en.pdf.
52      Council Decision of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2014 L 229, p. 13), as amended by Council Decision (CFSP) 2022/884 of 3 June 2022 (OJ 2022 L 153, p. 128).
53      Directive of the European Parliament and of the Council of 24 April 2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673 (OJ L, 2024/1226). The time limit for its transposition into national law ended on 20 May 2025.
54      Recital 15 thereof states: ‘An example of conduct circumventing Union restrictive measures that is increasingly widespread is the practice by designated persons, entities and bodies of using, transferring to a third party or otherwise disposing of funds or economic resources directly or indirectly owned, held or controlled by those designated persons, entities or bodies in order to conceal those funds or economic resources. … Therefore, that conduct circumventing Union restrictive measures should constitute a criminal offence under this Directive’.
55      Judgments of 18 April 2024, Citadeles nekustamie īpašumi (C‑22/23, EU:C:2024:327, paragraph 32), and of 17 November 2022, Rodl & Partner (C‑562/20, EU:C:2022:883, paragraph 34).
56      Directive 2015/849 will apply until 10 July 2027, from which date it will be replaced by Regulation (EU) 2024/1624 of the European Parliament and of the Council of 31 May 2024 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ L, 2024/1624), and by Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directive (EU) 2019/1937, and amending and repealing Directive (EU) 2015/849 (OJ L, 2024/1640). These provisions retain the same broad conception for determining beneficial ownership in trusts. In particular, Article 98(1) of Regulation 2024/1624 reproduces almost verbatim the content of Article 3(6)(b) of Directive 2015/849.
57      See the reproduction of this provision in point 11 of this Opinion.
58      I would reiterate that the applicant companies informed the bank with which they operated that their beneficial owner was the trust settlor.
59      See, in this regard, the grounds for inclusion in Annex I to Regulation No 269/2014 as set out in Decision (CFSP) 2022/337.
60      Trusts (Special Provisions) Act 1989, section 2(3), as amended by 2014: 22 s. 2, in force since 16 July 2014: ‘The reservation or grant by the settlor of certain rights and powers, and the fact that the trustee may himself have rights as a beneficiary, are not necessarily inconsistent with the existence of a trust’.
61      The prerogatives enjoyed by the trust settlor are referred to as ‘reserved powers’ in the Trusts (Special Provisions) Act 1989, section 2A(2).
62      The referring court will have to determine whether, in the event that the trust has been designed to be irrevocable, there is still any possibility of invoking that statutory provision, for example, where the objectives of the instrument of settlement.
63      On the scheme of restrictive measures imposed on Burma, the Court held that natural persons cannot be the subject of restrictive measures on the sole ground that they have a family connection with persons who are themselves the subject of such measures, irrespective of the personal conduct of such natural persons (judgment of 13 March 2012, Tay Za v Council, C‑376/10 P, EU:C:2012:138, paragraph 66). Advocate General Medina, in her Opinion in Timchenko v Council (C‑703/23 P, EU:C:2025:273, point 48), states that, in order to be classified as ‘associated’ within the meaning of Article 1(1) in fine of Decision 2014/145 (amended), the natural persons concerned by that article must ‘have a link going beyond a mere family relationship’, with the result that, where two persons are bound by such a relationship, it is necessary to establish ‘the objective existence of interrelated common interests’. In those cases, associated persons were included by name in the lists contained in the regulations concerned.
64      According to the European Commission, Consolidated FAQs on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014, 14 May 2024, p. 22, ‘strictly speaking, only the persons and entities who/which appear under the column “Name” in Annex I to Council Regulation (EU) No 269/2014 are directly subject to an asset freeze and a prohibition to make funds and economic resources available to them or for their benefit. However, these restrictions can affect transactions with natural or legal persons, entities or bodies associated with them, some of which happen to be mentioned in the “Identifying information” and/or “Reasons” columns of Annex I to Council Regulation (EU) No 269/2014’.
65      Commission opinion on Article 2(2) of Council Regulation (EU) No 269/2014, Document C(2021) 4223 final of 8 June 2021. These factors are much the same as those set out by the Council of the European Union, Restrictive measures (Sanctions) – Update of the EU Best Practices for the effective implementation of restrictive measures of 27 June 2022, paragraph 62, available at https://data.consilium.europa.eu/doc/document/ST‑10572-2022-INIT/en/pdf.
66      In connection with the application of restrictive measures to Iran, the judgment of 10 September 2019, HTTS v Council (C‑123/18 P, EU:C:2019:694, paragraph 75), stated that a company could be classified as ‘a company owned or controlled by another entity’ where the latter is in a situation in which it is able to influence the decisions of the company concerned, even in the absence of any legal tie between the two economic entities, or any link in terms of ownership or equity participation.
67      A situation in which the asset in trust is a company the object of which is the ownership of a luxury mansion, and that mansion is rented exclusively to the settlor, is evidence of the control which the settlor him or herself exercises over the company and the mansion.
68      In the final paragraph of the order for reference.
69      See, by analogy, judgments of 31 May 2018, Ernst & Young, (C‑633/16, EU:C:2018:371, paragraph 45), and of 4 March 2020, Marine Harvest v Commission (C‑10/18 P, EU:C:2020:149, paragraph 49), which define the concept of ‘control’ as ‘the possibility, conferred by rights, contracts or other means, of exercising decisive influence on an undertaking’. The Court takes into account for these purposes Article 3(2) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (OJ 2004 L 24, p. 1).