High Court confirms actual ownership of funds must be established before offence can be made out under Russian sanctions prohibitions

The High Court has considered whether a "reasonable cause to suspect" is sufficient, on its own, to establish an offence under Regulation 11 of the Russia (Sanctions) (EU Exit) Regulations 2019, which prohibits dealing with funds or economic resources owned, held or controlled by a designated person where the person so dealing knows, or has reasonable cause to suspect, that that is the case. The court rejected the submission that a reasonable suspicion is sufficient to make out the offence: it must also be established that an individual or entity is in fact owned or controlled by a designated person: Vneshprombank LLC v Bedzhamov [2024] EWHC 1048 (Ch).

The question arose in the context of an application for declarations as to whether there was reasonable cause to suspect that the claimant's litigation funder was owned or controlled by a designated person for the purposes of the Regulations. Having concluded that an offence cannot be made out unless ownership or control is established, the court declined to make a finding as to whether, on the evidence before it, there was in fact ownership and control, including because the question would only matter when a payment had to be made and that point had not yet arrived.

For more information see this post on our Banking Litigation Notes blog.