Control Beyond Ownership: The EU Court of Justice Advocate General’s Opinion on Trusts and EU Sanctions (Usmanov Case)

By Adv. Olga Timchenko

On 10 July 2025, Advocate General Campos Sánchez-Bordona delivered an Opinion before the Court of Justice of the European Union (CJEU) in a case that could reshape the future of sanctions enforcement across the EU. While the opinion of the Advocate General is not binding on the Court, it possesses netherless importants pursuasive authority.

The case concerns the freezing of assets held in a trust that was formerly settled by Alisher Usmanov, a sanctioned Russian businessman, who had exited the structure before sanctions were imposed. Although Mr. Usmanov no longer held any formal role in the trust at the time of enforcement, the Opinion concludes that the trust’s assets remain within the scope of EU sanctions due to the continuing control and influence he exercised over the structure.

This is the first time the CJEU has been called upon to interpret the notion of “control” and “association” in the context of trusts under Council Regulation (EU) No 269/2014. The Advocate General’s analysis introduces a new detailed understanding of how informal influence such as retained powers and indirect benefit can be sufficient to establish a connection between the trust and the listed person, even in the absence of direct legal ownership or beneficiary status.

The Case and Legal Context

Mr. Usmanov has been subject to EU sanctions since March 2022 for supporting actions undermining Ukraine’s sovereignty. Similar measures have been imposed by the United States, United Kingdom, Canada, Switzerland, Japan, Australia, and New Zealand. His global financial footprint and use of complex structures like trusts have made him a test case for the practical enforcement of sanctions.

In this case, the trust in question was structured to appear independent: the settlor (Mr. Usmanov) had ostensibly relinquished his status, and new beneficiaries were appointed. However, the referring court raised doubts about whether the structural changes truly severed his influence.

The Advocate General emphasised several key facts:

The trust deed conferred broad reserved powers on the settlor, including the right to replace trustees and change beneficiaries.

The settlor’s close family members remained involved in trust-related transactions.

Advocate General emphasizes that a settlor’s retained powers under the applicable trust law (Bermudian law) stating in the settlor’s extremely broad rights may establish a continuing beneficial relationship with the assets placed into the trust. These powers may include the ability to revoke the trust, direct investment decisions, appoint or remove trustees and beneficiaries, and even include oneself as a beneficiary. When such prerogatives are present, the settlor may effectively remain the beneficial owner of the trust property. Therefore, under Article 2(1) of Regulation No 269/2014, such assets may still be subject to EU restrictive measures, despite the formal transfer of legal ownership to the trustee. The Opinion did not contain analysis of the specific provision of the trust deed, and the content of those will determine whether the trust is controlled by the settlor or not.

The trust’s assets included a company that owned a luxury property used exclusively by Mr. Usmanov an arrangement the Advocate General viewed as evidence of ongoing control.

The Opinion rejected an idea that control by an “associate” of a person on a sanctions list, who is not listed himself, is sufficient for freezing the assets. Only control by a sanctioned person is to be assessed.

Implications

The Advocate General’s Opinion significantly strengthens the EU’s capacity to freeze assets that have been shielded through legal formalities but remain economically tied to sanctioned persons. It confirms that substance prevails over form: if a listed person continues to exercise influence over a trust through reserved powers, informal arrangements, or personal benefit then the trust assets may be frozen.

This approach provides clear guidance for national authorities, trustees, and financial institutions who must assess compliance risks. It also raises the bar for asset shielding strategies and signals increased scrutiny of trusts, especially those with discretionary or revocable elements involving sanctioned persons.

Removal of a sanctioned person from positions in the trust does not provide itself an immunity from imposing sanctions restrictions on the trust asset. In the Usmanov case such alterations were considered as indications of continued cntrol and involvement by the sanctioned settlor. However, under different circumstances such removal may serve as indication of termination of involvement of the settlor in the trust.

Actual provisions of the trust deed are of paramount importance for determination whether the assets of the trust originally established by a sanctioned person, remain liable for freezing or not.

Conclusion

The Opinion underscores the EU’s evolving sophistication in tracing economic reality behind formal legal structures. It affirms that sanctions are not limited to paper ownership, but extend to indirect control, influence, and benefit. The forthcoming judgment by the Court will determine whether this approach becomes binding EU law.