An investor holding capital through a Jersey, Cayman, British Virgin Islands or Dubai vehicle, or with partners from a country European institutions treat with suspicion, meets the same wall in Lisbon, Amsterdam or Milan. The bank asks for documents, the notary asks for more, and the purchase slows or dies with one word: compliance. That word hides three separate questions, governed by three bodies of law. Is the money legally frozen. How much risk does the counterparty take by touching it. Why does the structure that holds it exist at all.
An investor who treats them as one question prepares one file and receives one refusal. One who separates them can usually answer two quickly and spend the time where it matters.
A sanction is a prohibition, not a risk
The sanctions plane is binary. Council Regulation (EU) No 269/2014, the asset-freeze instrument adopted over Ukraine, states both rules in Article 2: all funds and economic resources belonging to, owned, held or controlled by the persons listed in its annex are frozen, and none may be made available, directly or indirectly, to or for their benefit. Economic resources include non-monetary assets that can be turned into funds, so a building counts. Regulation (EU) No 833/2014 is the sectoral companion, restricting trade and capital markets rather than freezing individuals.
Nothing in either text invites an assessment. A notary who completes a sale that puts funds at a listed person’s disposal has breached the prohibition; Article 10 excuses only those who did not know and had no reasonable cause to suspect. If this first question is answered yes, the other two never arise. Three lists do the work, the Union’s, the United Kingdom’s under OFSI and the United States list under OFAC, and any bank with dollar clearing or a London branch applies all three.
Ownership and control: three tests that almost match
Designations name people. The rules then reach the companies those people own or control, which is where an investor with sensitive partners finds exposure without being listed, and the thresholds differ. OFAC’s FAQ 401 treats as blocked any entity owned 50 per cent or more in the aggregate by one or more blocked persons, and FAQ 398 adds that the rule speaks to ownership, not control. The OFSI guidance uses more than 50 per cent of shares or voting rights and adds two control limbs: the right to appoint or remove a majority of the board, and a reasonable expectation that the person could direct the affairs of the entity. The Union will write the check into due diligence itself from July 2027: Article 20(1)(d) of Regulation (EU) 2024/1624 requires verifying whether sanctioned persons control a legal entity or hold more than 50 per cent of its proprietary rights, individually or collectively.
So a vehicle with a 50 per cent sanctioned shareholder is blocked in dollars and outside the United Kingdom test at once, and a 30 per cent shareholder who names the board is clear in Washington and caught in London. The organigram has to be read against all three first.
The AML plane is an assessment
The second plane works the opposite way. Anti-money-laundering law does not prohibit the transaction. It obliges a defined set of private actors to assess it and to refuse only where they cannot complete the assessment. Article 3 of Regulation (EU) 2024/1624 lists them: credit and financial institutions, notaries and lawyers acting in real estate transactions, trust and company service providers and estate agents. It applies from 10 July 2027 under Article 90; until then the national laws transposing Directive (EU) 2015/849, which Directive (EU) 2024/1640 repeals on that date, impose the same duties in differing forms. Directive (EU) 2024/1640 governs the national machinery, and Regulation (EU) 2024/1620 creates a single supervisor, AMLA, seated in Frankfurt am Main, with direct supervision of selected institutions intended from 2028.
Article 20 sets out what each obliged entity must do: identify the customer and the beneficial owners, understand the ownership structure and the purpose of the relationship, run the sanctions check, monitor transactions including where necessary the source of funds, and determine whether the customer or beneficial owner is a politically exposed person, a family member or a close associate. For a PEP, Article 42 adds senior management approval, source of wealth and source of funds, and enhanced monitoring. Every item is a question with a documentable answer, and none is a verdict.
The 25 per cent threshold and the chain
The figure that organizes the AML plane is 25 per cent. Under Articles 51 and 52, a beneficial owner is a natural person who holds, directly or indirectly, 25 per cent or more of the shares, voting rights or other ownership interest, or who controls the entity by other means. Indirect holdings are calculated by multiplying the interests at each level of the chain and adding the results across chains, and control is identified independently of ownership.
Two consequences follow. A chain built so that nobody crosses 25 per cent at any level can still produce a beneficial owner once the arithmetic is run, and the obliged entity must run it. And a settlor, protector or founder with reserved powers can be the beneficial owner of a vehicle in which they hold no shares. Who can then look those names up, and where, is the subject of a separate article on beneficial ownership registers.
High risk means more diligence, not a closed door
Country lists are the most misread part of the AML plane. Under Article 29 the Commission lists high-risk third countries with significant strategic deficiencies, taking account of the Financial Action Task Force. The FATF publishes two lists, a short call for action list and a longer list of jurisdictions under increased monitoring, updated three times a year; their current composition should be checked on the FATF site on the day of the transaction.
The Commission list holds 26 jurisdictions. As amended by Delegated Regulations (EU) 2026/46 and 2026/83, published on 9 January 2026, it includes the British Virgin Islands, Monaco, the Russian Federation, Trinidad and Tobago, Vanuatu and Viet Nam. Jersey, Guernsey, the Cayman Islands and the United Arab Emirates are not.
The legal effect of listing is precise. Article 29(4) requires enhanced due diligence under Article 34(4) for relationships involving persons from the listed country, and Article 35 allows specific countermeasures. Article 34(4) says what that diligence may consist of: more information on the customer and beneficial owners, on source of funds and source of wealth and on the reasons for the transactions, senior management approval, closer monitoring, and a first payment from the customer’s own account. That is a longer file, not a prohibition. An obliged entity that refuses on the list alone has made a commercial decision, not a legal one.
The structural plane: lawful, and under a presumption
The third plane has no list and no threshold. A holding in Jersey, the British Virgin Islands, the Cayman Islands or Dubai is lawful in every Member State, and no European rule forbids buying a building through one. The law instead places the structure under a presumption it must rebut. Annex III of the regulation, point (1)(h), names as a higher-risk factor a legal entity set up in a jurisdiction in which it has no real economic activity, substantial economic presence or apparent economic rationale, and point (1)(i) any customer owned by such an entity. Personal asset-holding vehicles, nominee shareholders and an unusually complex ownership structure are on the same list. A conventional offshore holding can match four at once.
The structure, not the money, becomes the object of enquiry: why the entity exists where it exists, expressed as people, premises and decisions, not as a tax outcome. The offshore substance regimes and the European framework in the substance requirements article make the same demand from the other side. A structure that answers in three sentences passes; one that needs a diagram fails.
A fourth list is routinely confused with the AML one and belongs here instead. The Council’s list of non-cooperative jurisdictions for tax purposes, revised on 9 October 2026, holds eight jurisdictions in Annex I: American Samoa, Anguilla, Guam, Palau, the Russian Federation, the Turks and Caicos Islands, the US Virgin Islands and Vanuatu. Annex II holds ten under commitment, including the British Virgin Islands, Panama and Viet Nam. It triggers national defensive tax measures and does not bind a bank; the British Virgin Islands appearing on both lists reflects two processes, not one judgement.
Where the three planes blur
In practice the three planes collapse into one sentence from the compliance department, and the collapse serves the institution. A bank declining on sanctions grounds would have to say so. One declining because it cannot complete due diligence must document the refusal, and the record follows the applicant. Compliance covers all three and commits to none, which is why a refusal rarely states its reason.
The investor’s task is to force the separation early, by asking in writing which of the three is being examined. A sanctions screen takes a day. An AML assessment has a defined list of inputs, in Articles 20, 34 and 42, and every one can be supplied unprompted. A structural objection cannot be answered with documents at all. Take a family holding European property through a Cayman vehicle funded by a sale in a Gulf state a decade ago. Screening is an afternoon; source of wealth is the sale agreement and that year’s tax filings; source of funds is the bank trail to the deposit. The remaining question is why Cayman, and if the honest answer is that a lawyer suggested it, nothing in the dossier supplies what is missing.
What to prepare, and when to take the structure apart
The dossier for the first two planes can be assembled before the first viewing: an organigram down to natural persons, with percentages and the control rights percentages do not show; a dated sanctions screen of everyone on it against the three lists; certificates of incorporation, good standing and incumbency for every entity; a source of wealth narrative for each beneficial owner, backed by the instruments that created the wealth; a source of funds trail for the money being used; and letters from auditors and tax advisers confirming each entity’s filings. Where a PEP appears, the dossier says so first.
The third plane cannot be prepared for in the same way, and the signs that it will defeat the purchase show on the organigram: an entity with no staff, no premises and no reason to be where it is; a jurisdiction that moved onto a list after the structure was built, as the British Virgin Islands did in January 2026; a chain whose only explanation is a tax outcome that no longer applies. There the correct step is set out in the article on unwinding an offshore structure: remove the redundant layers and arrive at the notary with a structure that explains itself.
The three questions are asked in sequence and each is final in its own way. A sanctions hit ends the matter. An AML assessment ends in a file that can be built or a refusal that is kept. A structural objection ends in a question only a different structure can answer.
This article is informational and does not constitute tax or legal advice. The treatment of any structure depends on its facts and on the law of each jurisdiction involved. Each engagement is subject to scope and applicable regulation.