Zombie Trusts: Russia in the Crosshairs

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:

• 
  
• 
  
• A Russian national or Russia resident
• 
  
• 
  
• 
  
• A Russian legal entity
• 
  
• 
  
• 
  
• Any entity owned (over 50%) by such persons
• 
  
• 
  
• 
  
• Any entity controlled by such persons
• 
  
• 
  
• 
  
• Anyone acting on behalf of the above
• 
  
• 
  

This covers both natural persons and corporate structures, making the rule extremely broad.

2. Ban on Trust Services

EU persons cannot:

• 
  
• 
  
• Act as trustee, nominee shareholder, director, secretary, or similar
• 
  
• 
  
• 
  
• Register a trust
• 
  
• 
  
• 
  
• Provide a registered office, business address, administrative address, or management services
• 
  
• 
  

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:

• 
  
• 
  
• A fiduciary relationship
• 
  
• 
  
• 
  
• Separation of legal vs. beneficial ownership
• 
  
• 
  

…may fall under the same restriction.

Guidance comes from:

• 
  
• 
  
• AML Directive (EU) 2015/849
• 
  
• 
  
• 
  
• Commission reports on trust-equivalent arrangements
• 
  
• 
  

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

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

5. Why the Term “Zombie Trusts”?

These structures:

• 
  
• 
  
• Still exist legally
• 
  
• 
  
• 
  
• Cannot operate
• 
  
• 
  
• 
  
• Cannot be dissolved or restructured...