FCDO and OFSI clarify “control”

FCDO and OFSI have given guidance on their approach to what “ownership and control” means when a public official is designated.  The guidance confirms that any entity which is owned or controlled by a designated person will be subject to financial sanctions even if not designated in its own right. Ownership and control involves direct or indirect holding or control of the majority of shares or voting rights in an entity or the ability to appoint or remove a majority of the board, or otherwise in circumstances where it would be reasonable to expect the person would be able to ensure the entity acted as that person wished.  Where public officials are concerned, the FCDO says it does not generally consider that these would exercise control over a public body in relation to which they hold a leadership function, so that if the individual became designated, the public body would generally not as a result become also subject to the sanctions that applied to the individual.  And where a public official is designated, this does not mean that sanctions must apply to all private entities incorporated or based in the country in relation to which the public official has control.  Giving the example of Russia, then, the UK Government does not consider that President Putin exercises control over all entities in the Russian economy merely because he is the Russian President. The guidance reminds firms that each question requires case-by-case analysis and appropriate due diligence.

Emma Radmore