Commercial Property Transactions: Due Diligence Best Practices

WHAT'S NEW

Key sanctions developments from the UK, EU and US from November 2025.

i. UK

1. On 14 November 2025, OFSI issued General Licence INT/2025/7895596 authorising transactions with two Bulgarian subsidiaries of Lukoil, Lukoil Bulgaria EOOD and Lukoil Neftochim Burgas AD, until 14 February 2026. New FAQ 173 describes the licence.

2. On 14 November 2025, the UK National Crime Agency and OFSI published an Amber Alert to provide information to institutions to help identify and prevent sanctions evasion involving transactions by networks and shadow fleets that support sanctioned regimes. It sets out red flags, including:

   1. Shipping companies or consignments that have changed ownership, name, management structures or flags within a short timeframe with no clear commercial rationale;

   2. Vessels engaged in voyages with gaps or unexplained deactivation in automatic identification system transmissions near sanctioned jurisdictions;

   3. Engagement with clients, counterparties or vessels previously linked to sanctions breaches or designated persons;

   4. Unusual or non-standard payment arrangements including third-party payments, cryptocurrency or payments inconsistent with industry norms.

      
      

3. On 13 November 2025, the UK Export Control Joint Unit (ECJU) published its quarterly report on licencing statistics. A total of 2,612 standard individual export licences were issued in Q2 and a decision was made within 20 working days for 53% of licence applications.

4. On 13 November 2025, the London branch of art gallery Hauser & Wirth and an arts logistics company were charged with a breach of UK sanctions regulations by making luxury goods available to a person connected with Russia contrary to Regulation 46B. The penalty is a potentially unlimited fine.

5. On 13 November 2025, the UK High Court awarded PrivatBank over USD$3 billion in damages against its former owners, Igor Kolmoisky and Gennady Bogolyubov for misappropriating almost USD$2bn in funds. Mr Kolomoisky and Mr. Bogolyubov requested a stay from the court arguing that Ukraine's sanctions prohibit asset transfers with Ukraine. The High Court rejected this argument saying that Ukrainian sanctions do not have this kind of extraterritorial effect in this case. The assets were abroad, and damages are payable in London.

ii. EU

1. Advocate General Biondi has published a non-binding opinion on Latvia's appeal against a General Court decision to annul EU sanctions on Petr Aven and Mikhail Fridman in 2022 (made on the basis that the Council had not provided sufficient evidence to support their designations). AG Biondi's opinion is that the Court should reject all grounds of Latvia's appeal. Of note, AG Biondi asserts that:

   1. There is no presumption that proximity to Russian decision makers necessarily means a person benefits from those decision makers for the purposes of EU sanctions regulations; and

      • The absence of actions by Fridman and Aven to distance themselves from the Russian Government could not, on its own, be used as evidence that they had supported Russian policies.

Advocate General opinions are not binding but historically the CJEU follows them in a majority of cases. The judgment of the court is expected to follow in the coming months.

The opinion contrasts with the UK Supreme Court decision in Shvidler where the court recognised the wider context and allowed consideration of the overall policy aim of the sanctions regime.

iii. US

1. On 14 November 2025, the US OFAC issued four General Licences relating to Rosneft and Lukoil:

   1. GL124B: authorises Rosneft and Lukoil to engage in petroleum services related to the Caspian Pipeline, Tengizchevroil and Karachaganak projects;

      • GL128A: authorises certain transactions involving Lukoil retail services stations outside Russia until 12:01am on 13 December 2025;

      • GL130: authorises transactions with 4 Bulgarian subsidiaries of Lukoil until 29 April 2026; and

      • GL131: authorises transactions facilitating the sale, disposition or transfer of Lukoil International GmbH (LIG) or any entity owned 50% or more by LIG provided that the transaction is contingent on approval from OFAC. This GL lasts until 13 December 2025.

2. Effective 30 September 2025, the Bureau of Industry and Security (BIS) announced that it would apply the 50% rule to the export control list, automatically imposing restrictions on entities 50% or more owned directly or indirectly by an entity on the Entity List, Military-End User List and certain SDN listed entities. This would have impacted thousands of entities across multiple jurisdictions and sectors and represented a significant change to the level of due diligence required in order to comply with US export controls. However, on 11 November 2025, the BIS suspended the application of the 50% rule to its export control list under the Export Administration Regulations until 9 November 2026. The 50% rule is still applied by the US OFAC.

2. YOUR 5-STEP CHECKLIST

Working through the following 5 questions will help you to better manage your business's sanctions compliance:

1. Which countries’ sanctions apply to your activities?

2. Are any of your business partners (banks, suppliers, customers, distributors etc.) subject to an asset freeze?

3. Are any of your activities affected by other financial sanctions?

4. Are your products or services restricted?

5. Do you have the right measures in place to mitigate your risks?

We step through the key considerations that will help you answer each question below.

1. Which countries’ sanctions apply to your activities?

The UK, EU, US and other countries’ sanctions typically must be observed if there is a sufficient nexus to confer jurisdiction, that is if:

• their nationals (individuals) are involved, wherever they are in the world (in the case of US sanctions, this includes US permanent residents/Green Card holders);

• any part of a transaction is conducted within their territory or airspace; and

• legal entities incorporated or constituted under their law, including foreign branches are involved; or

• with respect to US sanctions, if a transaction is conducted in US dollars or clears through the US financial system, or data is routed through servers in the US, or other back-office support or facilitation is provided by US persons (including service requests to an equipment supplier). Non-US persons may be penalised if they cause US persons to violate US sanctions, for example omitting reference to the involvement of a sanctioned party or jurisdiction to a financial transaction involving a US person.

UK sanctions may also apply to non-UK persons outside the UK if there is a sufficient nexus.  This will depend on the facts of each case but could include:

• transactions using clearing services in the UK;

• actions by a local subsidiary of a UK company;

• actions directed from within the UK; and/or

• financial products or insurance bought on UK markets but held or used overseas.

Additionally, US ‘secondary sanctions’ may be applied to non-US persons outside the US in the absence of any US nexus if a transaction involves sanctionable conduct that would be prohibited to a US person and that is determined by the US authorities to be a ‘significant’ transaction or otherwise provides material support to a sanctioned party.  Whether a transaction is ‘significant’ is based on a number of open-ended criteria e.g. the size, number and frequency of transactions.

Further, US export control restrictions may apply even if sanctions do not.  For example, US export controls will apply if US-origin goods, software or technology located in a third country are re-exported, regardless of whether a U.S. person is involved in the transaction. 

2. Are any of your business partners (banks, suppliers, customers, distributors etc.) subject to an asset freeze?

The UK, EU, US and others have imposed asset freezes (‘blocking sanctions’ in US terms) on most Russian banks, individuals and entities involved in strategic industries (e.g. defence, energy, finance, transport, research, media and aerospace), and senior individuals in the Russian government, state-owned corporations and major businesses, including family members, and they are continuing to add new names to their national lists of such ‘designated persons’. As the various sanctions regimes have matured, asset freezes have increasingly been imposed on third country entities and individuals (including those based in China, Turkey, the UAE etc.).

An asset freeze generally requires those within the scope of the national sanctions, as described at step 1 (above), to:

• freeze any assets of the designated parties that they may hold and to report these to their authorities;

• not make any funds or economic resources available to them, directly, indirectly or for their benefit (economic resources are broadly defined).

US and some EU restrictions go further and prohibit all transactions with the designated (i.e. listed) party.

The same restrictions also apply to any non-designated entity that is:

1. ‘owned’ by a designated party or parties. The US and EU threshold is 50% or more, while the UK threshold is ‘more than 50%’. The US and the EU (in guidance) consider the criterion met if the aggregated ownership of two or more designated parties exceeds the threshold. The UK recognises aggregated ownership only if there is evidence of a joint arrangement between two or more designated parties; or

2. (in the UK/EU, not the US) ‘controlled’ by a designated entity (i.e. able to ensure the affairs of the undesignated entity are conducted in accordance with their wishes, for example through controlling a majority of voting shares or having the right to appoint or remove a majority of the board of directors).

'Control' considerations:

It is often challenging to reach a definitive view of whether this ‘control’ criterion is applicable, for example if a majority shareholder becomes sanctioned and passes some of their shares to unsanctioned family members or to business associates. Some key considerations are set out below:

UK: The UK courts and Government have all contributed to a somewhat uncertain definition of 'control'.The Court of Appeal's 2023 judgment in Boris Mints & Ors v PJSC National Bank Trust (NBT) & Anor implies that all Russian state-owned companies may be controlled by President Putin, a designated person. The judgement is being appealed to the Supreme Court.The UK High Court's judgment in Hellard v OJSC Rossiysky Kredit Bank & Ors discusses the test for "control" in light of the Mints judgment, breaking the concept of control into 4 categories: de jure control; actual present de facto control; potential future de jure control and potential future de facto control.UK Government guidance published after the ruling in Mints states that: "If [Government] considered that a public official was exercising control over the public body under UK sanctions regulations, [the Government] would look to designate the public body where possible when designating the relevant public official." That is, in the view of the UK Government, simply being run or overseen by a UK designated public official would not of itself mean the organisation is subject to UK sanctions.The 2025 High Court judgment in Nikolay Fetisov & Ilya Yurov & PJSC National Bank Trust applied the above judgments when considering whether President Putin and/or Central Bank of the Russian Federation Governor Elvira Nabiullina "control" NBT (the same entity considered in the Mints decision. In this case, the Court found that the absence of evidence of potential de facto control was significant, ultimately deciding that NBT was not "controlled" by a designated person and therefore did not need to be treated as subject to an asset freeze. This aligned with a statement from OFSI presented in evidence noting that "OFSI does not consider NBT to be subject to sanctions."The UK Office of Financial Sanctions Implementation (OFSI) provides guidance on how to determine whether an entity is owned or controlled by a sanctioned person. It treats ownership and control together, and therefore does not provide a stand-alone definition for control. Nonetheless, according to the guidance, an entity is considered owned or controlled, directly or indirectly, if any of the following apply:

• ​​​​​the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity;

• the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity; and/or

• it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes.

OFSI's guidance provides practical examples of the circumstances above and discusses ownership and control in relation to minority interests, joint interests and aggregation.The takeaway from the above is that ongoing and enhanced due diligence and monitoring is important. See paragraph 5 below for our tips on due diligence and general compliance.