Asset Freezing and the “Control” of a Sanctioned Person: CJEU Clarifies the Standard of Proof under Regulation 269/2014
In its judgment of 3 September 2026 in Case C-147/25, Inter Rao Lietuva, the Court of Justice of the European Union returned to the issue of asset freezing under Regulation (EU) No 269/2014, particularly in relation to legal entities allegedly controlled by individuals subject to EU restrictive measures.
As highlighted by Valeria Valentini, Counsel at Carbonetti e Associati, the judgment provides important clarification on the standard of proof required to establish that a company is controlled by a sanctioned person and may therefore be subject to asset-freezing measures.
The Inter Rao Lietuva case
The case concerned Inter Rao Lietuva, a Lithuanian company whose funds had been frozen on the basis that it was allegedly indirectly controlled by a Russian company, which was itself linked to individuals associated with the President of the Russian Federation.
However, there was no direct shareholding link or formal legal relationship between the sanctioned individual and the company concerned.
The finding of control relied, to a significant extent, on the political and institutional context in Russia and on the nature of the country’s political regime.
It is precisely this approach that the Court of Justice rejected.
Control must be supported by evidence
According to the Court, the autocratic nature of the Russian regime cannot, in itself, constitute sufficient evidence that a sanctioned person controls a particular company.
In order to justify the freezing of assets on the basis of control exercised by a sanctioned person, it is necessary to demonstrate the existence of an actual influence over the company concerned.
Such control may be established through direct evidence or through a body of concrete, precise and consistent evidence capable of demonstrating the effective existence of a relationship of control.
The assessment must therefore be conducted on a case-by-case basis. A company’s connection with a particular jurisdiction, or the political and institutional context of its country of origin, cannot replace evidence demonstrating that a sanctioned person effectively exercises influence over the company’s decisions.
What are the implications for financial institutions and companies?
The judgment is particularly relevant in the context of international sanctions compliance, especially for banks, financial institutions and companies dealing with entities that may be connected to sanctioned individuals.
The decision confirms the importance of carrying out a documented and fact-specific assessment of the elements capable of establishing a relationship of ownership, control or effective influence.
For businesses and financial institutions, this means ensuring that appropriate sanctions screening, due diligence and verification procedures are in place, particularly where corporate structures are complex, indirect or involve multiple jurisdictions.
The judgment also highlights the need to avoid automatic conclusions based solely on nationality, indirect corporate links or the political context of the country concerned.
The distinction between national security assessments and corporate control
The Court also clarified the limits of the review that may be carried out by national courts.
The assessment of whether a person or entity represents a threat to national security, for the purposes of inclusion on an EU sanctions list, falls within the competence of the European Union and the relevant listing process.
A national court examining the consequences of restrictive measures cannot therefore reassess the underlying EU-level determination relating to national security.
The existence of corporate control, however, must be assessed on the basis of the specific facts and circumstances of the individual case and supported by sufficient evidence.
Procedural safeguards in asset-freezing measures
Finally, the Court addressed the procedural safeguards associated with asset-freezing measures.
The reasons underlying the measure must be communicated to the person concerned “as soon as possible”, including where such communication takes place after the measure has been adopted, in order to ensure that the person concerned is able to exercise their right to an effective legal remedy.
The judgment therefore confirms the central role of effective judicial protection in the implementation of EU restrictive measures, even where the urgency of the situation may justify a delayed communication of the reasons for the measure.
A higher evidentiary threshold for establishing control
The Inter Rao Lietuva judgment (Case C-147/25) represents an important development in the interpretation of Regulation (EU) No 269/2014.
While confirming that asset-freezing measures may extend to companies indirectly controlled by sanctioned persons, the Court requires that such control be supported by concrete and verifiable evidence. It cannot simply be inferred from the political or institutional context of the state concerned.
The judgment therefore reinforces the need for an individualised assessment of ownership, control and effective influence, providing important guidance for financial institutions, companies and other operators required to implement EU restrictive measures and sanctions compliance procedures.
