The Court of Justice of the European Union handed down two rulings on 21 May 2026 that address the use of trusts in two distinct contexts: public access to beneficial ownership information, and the circumvention of EU freezing measures and sanctions.

Legitimate-interest access to trust beneficial ownership confirmed

In the first ruling, the Court confirmed that granting public access to information on a trust's beneficial owners on the basis of a 'legitimate interest' is compatible with EU fundamental rights law. The Court held that:

"laying down public access to beneficial ownership information, provided there is a legitimate interest, is compatible with the rights guaranteed in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union. According to the Court, by that legislation, the EU legislature is pursuing a legitimate and important objective, namely, the prevention of money laundering and terrorist financing through increased transparency, in accordance with the principle of proportionality."

The judgment does not disturb the Court's 2022 ruling, which invalidated unrestricted public access to beneficial ownership registers. The legitimate-interest standard was already contemplated in the fifth EU anti-money laundering directive (AMLD 5) of 2018, developed further under the EU AML Package of 2024, and accepted by the Court in 2022 with respect to legal persons. The 2026 judgment extends that framework to trusts. Following the 2022 ruling, several EU member states closed their public registries, while some non-EU jurisdictions, including the Cayman Islands, have adopted a legitimate-interest model.

Sanctions, control and the 'ownerless limbo'

The second ruling carries greater practical significance for practitioners. The case arose from a reference by an Italian court concerning sanctioned individuals who placed assets into discretionary trusts and were subsequently removed as protectors or beneficiaries.

The Court held that assets can be regarded as belonging to, or being under the control of, a settlor or beneficiary where those persons have "power to use, benefit from or dispose of those resources or to have influence over them and over the decisions made by the trustee in relation to them."

Critically, the Court stated that indications of ownership or control "may be inferred from factual circumstances or from the presence of needlessly complex legal structures." Relevant factual circumstances include the relationships between the beneficiary or settlor and other persons involved in the trust, and the allocation of the trust's economic resources to activities intended primarily, even if indirectly, for the beneficiary or settlor. Indications also include the beneficiary or settlor holding a majority of the capital or voting rights in the trustee; entities being set up or changing identity shortly before sanctions come into force; and relationships between the directors of companies subject to freezing measures and the beneficiary or settlor.

The Italian referring court's reasoning

The judgment reproduces extensive observations from the Italian referring court, which the Court of Justice engaged with directly. Five points stand out.

Retention of control. The Italian court reasoned that a person intending to transfer an asset definitively would simply donate it. Placing it in a trust instead signals an intention to retain control. The contribution to a trust "would not have the effect of definitively severing the link of 'ownership' between the assets contributed to the trust and the settlor, who would objectively be able to exercise substantial influence over them." That influence stems from the possibility of recovering formal ownership upon early termination of the trust or refusal by beneficiaries to accept the assets, and from the settlor's choice of trusted persons to manage and control the trust.

**Deemed ownership until distribution.} The Italian court proposed that, where taxes, unpaid debts or sanctions are concerned, assets placed in a trust should be treated as belonging to the settlor until effectively distributed to third-party beneficiaries. In its words, "a trust, at least until the assets contributed to it are definitively allocated to third parties, would constitute an easily usable mechanism for circumventing the measures for freezing funds and economic resources provided for by Union law."

Limited weight of the trust deed. Because trusts are typically neither registered nor published, and trust documents can be amended or backdated, the Italian court cautioned against placing excessive weight on the current text of a trust deed. It noted that the deed's "versions in force... may not be made available and are, in any case, liable to be modified," and that the trust's private nature, ease of creation and modification can conceal the settlor's ongoing link to the funds.

Looking beyond the registered owner. Courts and authorities should look past the nominee or trustee appearing as registered owner. The Italian court stated that the notion of 'ownership' "must be interpreted as covering not only situations in which such power over the funds and economic resources concerned can be legally attested, but also situations in which a person or entity actually possesses this power, despite the fact that, legally, the holder of said power is another person or entity."

**Governing law matters.} Finally, the referring court pointed to the significance of the trust's governing law — Bermuda in the underlying dispute. Prerogatives conferred by that law on the settlor, such as the power to revoke the trust, to give binding instructions to the trustee, to appoint or remove trustees, protectors or beneficiaries, or to be a joint beneficiary, "could indicate that the settlor has influence over the funds and economic resources contributed to the trust," whether or not those prerogatives appear explicitly in the trust deed or its amendments.

Consequences for practitioners

For private client, sanctions and asset recovery lawyers, the sanctions ruling materially raises the risk that assets held in trusts — particularly discretionary structures in offshore jurisdictions — will be attributed to settlors or beneficiaries for freezing and sanctions purposes. Factual control, structural complexity and the timing of entity changes now serve as admissible indicators of ownership, and courts will scrutinise the settlor's prerogatives under the governing law regardless of what the trust deed says on its face. Compliance teams advising trustees and settlors should expect national authorities across the EU to test the ruling's reach in enforcement proceedings, and trusts established or restructured shortly before sanctions took effect will face heightened scrutiny.