EU Court Clarifies When Sanctions Extend to Companies Linked to Listed Individuals

On 12 March 2026, the Court of Justice of the European Union delivered an important ruling in Case C-84/24, clarifying how EU sanctions apply to companies connected to sanctioned individuals. The case arose from a dispute between Lithuanian company UAB EM System and two banks, SEB Bankas and Citadele Banka, which had frozen the company’s bank accounts. The banks acted under EU sanctions targeting Belarus, after a shareholder holding 50% of the company was included on the EU sanctions list under measures adopted pursuant to Council Regulation (EC) No 765/2006.

The central legal question was whether the funds of a company not itself listed under EU sanctions must automatically be frozen when one of its shareholders—holding a significant stake—is listed. The Lithuanian Supreme Court referred the issue to the CJEU for interpretation of EU sanctions rules.

The Court’s Interpretation

The Court held that a company’s assets may be frozen even if the company itself is not listed, provided it is controlled by a sanctioned person or entity. However, the Court emphasized that control cannot be presumed automatically simply because a listed individual owns 50% of the company’s capital. Instead, authorities and financial institutions must assess whether the sanctioned shareholder actually exercises control over the company.

The ruling also stresses the importance of procedural safeguards, including the right to effective judicial protection and respect for the rights of defence. Companies whose assets are frozen due to connections with sanctioned persons must be able to challenge the decision and demonstrate that the sanctioned shareholder does not exercise real control over their operations.

Why the Decision Matters

The judgment provides important guidance for banks, compliance teams, and regulators implementing EU sanctions. It confirms that financial institutions must look beyond formal shareholding structures and assess actual control relationships when deciding whether to freeze a company’s assets. At the same time, it protects companies from automatic sanctions spillover where ownership alone does not amount to control.

For AML and sanctions compliance professionals, the decision reinforces the need for risk-based analysis of ownership and control structures, especially in cases involving politically sensitive sanctions regimes such as those imposed in response to developments in Belarus.