EU Russia Sanctions & the 50% Ownership/Control Rule — A Practical Guide for Dutch SMEs (Sanctiewet 1977 & Wwft)

ENNL

If any sanctioned person/entity owns an aggregate ≥50% of your counterparty or exerts control (e.g., board power, veto, acting in concert), the counterparty is generally treated as sanctioned. In the Netherlands, this sits under Sanctiewet 1977 and intersects with Wwft (KYC/UBO). This guide shows how to operationalize ownership/control tests and document decisions with MatchAudit.

Not legal advice. Use this guide to structure your workflow; consult counsel for edge cases.

Why Dutch SMEs care right now

Indirect exposure: Your customer or supplier may be clean, but a sanctioned UBO behind it may not be.
Multi-regime pressure: Banks and partners often take a conservative view across EU, UK, US/OFAC, UN, CH/SECO, AU/DFAT, CA.
Audit expectations: Payment providers, marketplaces, and freight partners increasingly ask for audit-ready evidence.

Core concepts (plain English)

1) The 50% ownership rule

If one or more sanctioned persons/entities together hold ≥50% (directly or indirectly), treat the target as sanctioned. Aggregation matters:

Example: SDN A 30% + SDN B 25% ⇒ 55% aggregated ⇒ generally prohibited.
Look-through: 60% of a holdco that owns 60% of the target = 36% indirect (0.6 × 0.6).

2) The control test (even when <50%)

Control can exist below 50% via:

Board appointment/removal rights; golden shares; veto/negative control
Shareholder agreements; acting in concert; de-facto dominance through covenants
Nominees or proxies exerting influence for a sanctioned person

3) NL framework references

Sanctiewet 1977: Dutch law implementing international sanctions.
Wwft: KYC/UBO obligations; the data you collect powers the ownership/control test.
You stay responsible for transaction-level decisions and recordkeeping.

What to collect (checklist)

Counterparty identity: legal name(s), trade names, registration/KvK number, address, country
UBOs and owners: name, % stake (direct & indirect), chain of entities, voting/control rights
Officers/Directors: roles, appointment rights, veto/negative control indicators
Shareholder agreements: control provisions, acting-in-concert clauses
Geography & activity: shipping routes, potential re-exports, end-use/end-user

Keep it all in your audit trail. In MatchAudit, export a PDF with list versions/timestamps and attach ownership proofs.

An operational flow you can implement this week

Screen names you deal with (company + UBOs + directors) in MatchAudit.
- Free/Starter → daily offline lists (EU, UK, US/OFAC, UN, CH/SECO, AU/DFAT, CA).
- Pro+/API → OpenSanctions API for near real-time freshness.
Build the ownership graph: each shareholder’s % and link to the next layer.
Calculate aggregate % held by sanctioned persons/entities across the graph.
Run a control check: board rights, veto, shareholder agreements, acting-in-concert indicators.
Decide:
- If aggregate ≥50% or control likely → Block / Seek licence.
- If <50% and no control → Proceed with caution, set monitoring if risk remains.
Document: generate a PDF from MatchAudit with source/timestamps + your ownership worksheet + decision note.

Tip: Create a one-page “Sanctions Determination Memo”: inputs, tests applied, conclusion, reviewer & date.

Worked examples (ownership vs control)

Scenario	Ownership	Control signals	Likely outcome
SDN A holds 40%; no others	40%	None	Often allowed (monitor)
SDN A 30% + SDN B 25%	55%	Aggregated	Prohibited absent licence
SDN A 20% + veto over budgets	20%	Negative control	Treat as control → prohibit
SDN A 49% + friendly 2% nominee	51% (substance)	Acting in concert	Prohibited
SDN A 0%; lender appoints board	0%	Control via agreements	Control may apply

Screening that stands up in audit (how MatchAudit helps)

Coverage: EU, UN, UK, OFAC, Switzerland, Australia, Canada; daily snapshots (Free/Starter) or API real-time (Pro+).
Accuracy & explainability: input normalization (transliteration, diacritics removal), strict fuzzy search (no phonetic widening); per-list details (DOB, nationality, programs, AKAs).
Multilingual names: input may be non-Latin; we transliterate, and where sources include non-Latin aliases, we show both forms in results.
Audit trail: timestamps, list source/version, matched fields, confidence score and reason; PDF/CSV exports.

Implementation notes for NL SMEs

Contracts: reps/warranties, notification duties for ownership/control changes within 24–48h.
Channel partners: resellers/agents certify they’re not owned/controlled by sanctioned persons and won’t circumvent measures.
Logistics: watch trans-shipment via third countries; use end-use statements and destination screening.
Payments: anticipate bank KYC questions; attach your MatchAudit report + ownership memo.

FAQ (quick answers)

Is 49% always safe?
No. Control can still apply (veto rights, acting in concert). Evaluate control independently.

Do I aggregate only listed persons?
Yes—aggregate only sanctioned persons/entities. You still screen all owners to identify them.

What if a sanctioned person owns 25% of a parent that owns 80% of my counterparty?
Indirect % = 25% × 80% = 20%. Aggregate with other sanctioned holdings, then apply the control test.

Can I rely on a counterparty letter?
Take it, but verify with registries/filings and your own screening. Keep evidence in the file.

Glossary (fast definitions)

UBO: ultimate beneficial owner—natural person(s) with significant ownership/control.
Acting in concert: two or more persons coordinating to exercise control.
Negative control: rights that can block/shape decisions (veto).
Indirect ownership: stakes held via other entities down the chain.

Next steps

Start with Free (daily snapshots) to validate workflow.
Move to Pro + API for real-time freshness, monitoring, and bulk automation.
Enable PEP/Adverse Media add-ons if your bank expects enhanced screening.