EU Sanctions: New Best Practices Guide
The EU's decision to align its sanctions guidance more closely with US standards on ownership and control tests is a significant step. Here’s a rundown of the key changes that will bring reassurance to the legal and compliance professionals in companies subject to EU sanctions.
The European Union updated its "Best Practices" guidance on sanctions, with the latest version dated 3 July 2024. These updates significantly change how ownership and control are assessed under EU sanctions regimes. Companies must be aware of these changes and update their policies accordingly.
Main Points
🔔 Updated Ownership Threshold. The EU has revised its ownership test. Previously, the guidance required a "more than 50%" ownership threshold to determine if a designated person owns an entity. The new rule simplifies this to a "50% or more" test. This change aligns the EU’s approach with that of the US and diverges from the UK’s position.
🔔 Aggregation of Ownership Across Multiple Designated PersonsThe updated guidance confirms that ownership held by multiple designated persons should be aggregated. While this principle was already established for the Russia sanctions regime, the new guidance makes it clear that this aggregation applies across all EU sanctions regimes.
🔔 Clarified Control IndicatorsThe revised guidance includes new indications on how control by a designated person may be demonstrated. This addition provides more clarity on what constitutes control in the context of sanctions.
Conclusion
These updates to the EU sanctions guidance represent a significant shift towards greater alignment with US standards, which may impact how entities are assessed under EU sanctions. Companies will need to review and possibly revise their ownership and control assessments, especially if the level of ownership was precisely 50%.
Recommendation
Given these important updates, it's crucial that companies promptly update their policies and procedures to ensure they reflect the new EU guidance on ownership and control. It's also advisable to re-evaluate previous assessments to ensure compliance with the new 50% or more threshold.
More Information and Links
· Access our Sanctions Knowledge & Resource Hub
· Access all Sanctions Documents on our Sanctions File Repository
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