Major restrictions for European trust arrangements for Russia-related beneficiaries

On 8^th of April 2022, the EU passed the fifth package of sanctions against Russia, featuring an especially wide scope of restrictions on Russia-related entities as well as individuals.

Among other things, Council Regulation (EU) 2022/576 dated 8^th April 2022 is giving effect to the restrictions on acting as a nominee, a trustee or in similar capacities for Russian nationals and residents, or entities controlled by such individuals, as well as a prohibition on providing certain services to such trusts. In a greater detail it means a new prohibition on registering, providing a registered office, business or administrative address, management services, to a trust or any similar legal arrangement having as a trustor or beneficiary Russian nationals or residents, entities established in Russia or entities owned, controlled or acting on behalf of any of those. The prohibition has immediate effect in respect of new relationships, while existing contracts are to be terminated by 10 May 2022. 

The new regulations exempt from their provisions trustors or/and beneficiaries who are nationals or permanent or temporary residents of EU Member States, EEA and Switzerland. However, holders of Russian passports (including those holding citizenship of their country of residence) who are neither EU nor Russian residents (such as residents of US, UK or Israel), are not exempt from restrictions.

The area of cryptocurrency also features expanded restrictions. There is an amendment to the existing restrictions in the EU Regulation 833/2014 (previously amended in March 2022) relating to the acceptance of deposits from Russia-related account holders. The new rules extend the restrictions to the provision of crypto-asset wallet or account, where the total value of cryptocurrency assets exceeds 10,000 EUR.

Switzerland has not enacted similar restrictions, but it should be considered that Swiss authorities have mirrored (since February 2022) the sanctions regulations of the EU, and the same may occur in this matter in the near future.

Concerning the United Kingdom, the same actions might be expected as well, however all restrictions which were adapted by the Foreign Secretary on 08^th of April 2022, dealt with other areas and set aside both trusts and cryptocurrency. More information on the restrictions adopted by the EU on April 8^th, 2022, can be found here.