By Implementing Regulation (EU) 2026/2281 of 12 October 2026, the Council added 826 organisations and 743 natural persons to Annex I to Regulation (EU) No 269/2014. The individuals in question are the managing directors of these companies within the military-industrial complex.
This is the largest single expansion since 2022. The regime now comprises just under 4,600 listings. On the same day, the Council listed a further 77 individuals in connection with the Duma ‘elections’ in the occupied territories. All those newly listed are now subject to a freeze on their funds and economic resources, which must not be made available to them either directly or indirectly.
However, the impact extends beyond the list: Companies owned or controlled by those on the list may also be affected, even if they are not named themselves: in its judgment of 12 March 2026 (Case C-84/24, EM System), the European Court of Justice clarified when the assets of an unlisted company are subject to the freezing requirement under Article 2 of Regulation (EU) No 269/2014. In the case in question, Lithuanian banks had frozen the accounts of EM System UAB because a shareholder listed under the Belarus Regulation (EC) No 765/2006 held exactly 50 per cent of the capital. The Court made three key findings in this regard:
- The freezing measure also applies to funds and economic resources of a non-listed company if a listed person holds or controls them.
- “Ownership” and “control” are to be interpreted broadly. Indirect influence must also be taken into account. A 50 % shareholding in the capital gives rise to a presumption of control over the company and, consequently, over its assets.
- However, this presumption is rebuttable. Member States must provide for a procedure whereby the company and the listed person can rebut the presumption.
Although the ruling concerns the Belarusian regime (Regulation (EC) No 765/2006), the the provision, as interpreted by the Court, uses wording identical to that of Article 2(1) of Regulation (EU) No 269/2014. The Deutsche Bundesbank already applies this as a general principle in Questions B.4 and B.5 of its FAQs on financial sanctions (as at June 2026) and considers control to be possible even in cases involving smaller shareholdings, depending on the circumstances of the individual case.
Affected despite unremarkable screening
The “EM System” directly concerns the freezing of assets, but, in our assessment, it also has an impact on the prohibition on making funds available. If the funds of an unlisted company are deemed to be controlled by the listed person, payments and deliveries to that company indirectly benefit the listed person (Article 2(2) of Regulation 269/2014). The Council’s Best Practices also generally treat supplies to controlled companies as indirect making available. The tricky thing about this is that the business partner itself does not appear on any list. A sanctions list programme therefore does not flag a match, even though the transaction may fall under the embargo. Business partners in which one of the 826 companies or one of the 743 directors holds a stake of 50 % or more must therefore be treated as listed entities until the presumption is rebutted.
However, this is not intended to foster a general mistrust of business partners. As is so often the case, a risk-based approach applies. If there are indications of control by a listed person (for example, based on public information provided by the business partner, reports or registers), this must be investigated.
However, the principle set out in Article 10(2) of Regulation 269/2014 remains in force, according to which economic operators cannot be held liable if they did not know, or had no reasonable grounds to believe, that their actions contravened the measures set out in the Regulation. Since 6 February 2026, the former grace period provision in Section 18(11) of the AWG (old version) has been repealed. The Regulation must therefore be implemented immediately.
By: Maximilian Pohl
