In this episode, we break down the EU’s crackdown on Russian-linked trusts — now widely referred to as “zombie trusts” — following amendments to Article 5m of Council Regulation (EU) 833/2014. These rules have rendered many existing structures legally unserviceable and have effectively shut the door to new trust formation involving Russian nationals or entities.

Key Points Covered:

1. What Article 5m Now Prohibits

Under the amended regulation, EU persons and service providers are barred from registering, hosting, or managing trusts where any of the following are involved:

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• A Russian national or Russia resident
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• A Russian legal entity
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• Any entity owned (over 50%) by such persons
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• Any entity controlled by such persons
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• Anyone acting on behalf of the above
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This covers both natural persons and corporate structures, making the rule extremely broad.

2. Ban on Trust Services

EU persons cannot:

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• Act as trustee, nominee shareholder, director, secretary, or similar
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• Register a trust
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• Provide a registered office, business address, administrative address, or management services
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For many existing structures, this has created “zombie trusts” — trusts that still legally exist but cannot be administered or serviced inside the EU.

3. What Counts as a “Similar Legal Arrangement”?

The EU provides no unified definition, but any structure with:

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• A fiduciary relationship
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• Separation of legal vs. beneficial ownership
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…may fall under the same restriction.

Guidance comes from:

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• AML Directive (EU) 2015/849
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• Commission reports on trust-equivalent arrangements
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Importantly, Article 5m’s scope is wider than the AML definition — capturing more structures, more situations, and more service providers.

4. Practical Effects on Russian Clients

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• New trusts cannot be registered.
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• Existing trusts cannot receive ongoing service (trustee, office address, administration).
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• Many trusts are now effectively frozen unless moved outside the EU.
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• Professional trustees in the EU are legally obligated to exit these relationships, often abruptly.
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5. Why the Term “Zombie Trusts”?

These structures:

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• Still exist legally
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• Cannot operate
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• Cannot be dissolved or restructured easily
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• Cannot receive services from EU professionals
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They remain “alive” in law but “dead” in function — hence the name.

Takeaway:

The EU’s Article 5m amendments represent one of the harshest global restrictions on Russian-linked wealth structures. Trusts with even indirect Russian connections are now unserviceable inside the EU, creating urgent challenges for settlors, beneficiaries, and professional trustees.

In today’s geopolitical climate, trust and asset-planning frameworks involving Russian persons must be handled with extreme caution — and often require relocation outside the EU to remain viable.