OFSI publishes guidance on ‘ownership and control’

The UK’s Office of Financial Sanctions Implementation (‘OFSI’) published, 20 August, new guidance on its approach to ‘ownership and control’, the intention of which, it says, ‘is to ensure that sanctions cannot be easily circumvented.’

It explains:  ‘An entity is owned or controlled directly or indirectly by another person in any of the following circumstances:

• the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity
• the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity, or
• it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes

‘This could, for example, include:

• appointing, solely by exercising one’s voting rights, a majority of the members of the administrative, management or supervisory bodies of an entity, who have held office during the present and previous financial year
• controlling alone, pursuant to an agreement with other shareholders in or members of an entity, a majority of shareholders’ or members’ voting rights in that entity
• having the right to exercise a dominant influence over an entity, pursuant to an agreement entered into with that entity, or to a provision in its Memorandum or Articles of Association, where the law governing that entity permits its being subject to such agreement or provision
• having the right to exercise a dominant influence referred to in the point above, without being the holder of that right (including by means of a front company)
• having the ability to direct another entity in accordance with one’s wishes. This can be through any means, directly or indirectly. For example, it is possible that a designated person may have control or use of another person’s bank accounts or economic resources and may be using them to circumvent financial sanctions

‘If any of the above criteria are met, and the person who owns or controls the entity is also a designated person, then financial sanctions will also apply to that entity in its entirety (meaning these assets should also be frozen).’

https://www.gov.uk/government/publications/ownership-and-control-public-officials-and-control-guidance/ownership-and-control-public-officials-and-control-guidance