A foreign-owned Belarusian subsidiary now sits between two compliance regimes that don’t always agree. The parent operates under the sanctions law of its home country — EU restrictive measures, US OFAC programmes, UK financial sanctions. The subsidiary operates under Belarusian law, which since 2022 has built its own counter-measures aimed at owners from the same jurisdictions. The two systems run in parallel most of the time. They touch each other at specific operational points, and those are where compliance work actually happens.
This article maps those points of contact for a foreign parent running a Belarusian subsidiary. It is not sanctions advice — the parent needs home-country sanctions counsel for that, and we say so plainly throughout. What it does is describe where the two regimes interact at the subsidiary level, what the parent’s compliance team should reasonably want from the local entity, and where the genuine conflicts arise.
You’re dealing with three home-country regimes, and depending on where your parent is incorporated, one or two of them apply to you. On the EU side, the framework lives in Council Regulation 765/2006 and a long string of amending packages; the EUR-Lex landing page collects them in one place. The US side runs through executive orders administered by OFAC, and in practice the SDN List is the day-to-day reference document. The UK has its own regime now, run by OFSI under the Belarus (Sanctions) (EU Exit) Regulations 2019, with the UK Sanctions List as the consolidated reference. The three look related from a distance, and they were originally coordinated, but they’ve diverged enough that reading across them isn’t safe. They also amend at different speeds, which makes “are we current?” a separate question for each one.
On the Belarusian side, the counter-measures regime grew out of decrees and resolutions issued from 2022 onward. The most consequential is Edict No. 326 of 19 October 2023 (amending Edict No. 93 of 14 March 2022), on the alienation of shares, participation interests and real estate by persons from “unfriendly” states. As the Ministry of Economy explains, the regime requires Government permission and a payment to the local budget of at least 25% of the market value for affected transactions. The unfriendly-states list mirrors the parent-side sanctions universe almost exactly — every EU member state, the UK, the US, Canada, Norway, Switzerland and a handful of others.
These two systems are not opposed by default. Most foreign-owned Belarusian subsidiaries operate without ever encountering a direct conflict. The compliance work concentrates on the specific operational points where they do interact.
Counterparties — and the 50% rule
This is the most common interaction, and the one most readily addressed at the subsidiary level. EU, US and UK sanctions all extend, in different ways, to entities owned or controlled by designated persons even when those entities aren’t themselves named. The US “ownership 50% rule” is the cleanest version: any entity 50% or more owned by one or more SDNs is itself treated as blocked. EU and UK regimes use slightly different ownership-and-control tests but reach similar territory.
For the subsidiary, the consequence is operational. Local counterparties — suppliers, customers, banks, the individual signatories on contracts — need screening on onboarding and at intervals, against the parent’s applicable sanctions lists, with ownership-and-control checks layered on top. Belarusian commercial practice often doesn’t include that level of due diligence as a matter of course. Installing it is the subsidiary’s piece of the work. Our counterparty-check service is one way to do it; whatever method you choose, the workflow itself is what matters.
Banking and correspondent relationships
Several Belarusian banks are themselves on parent-side sanctions lists, and a number that aren’t directly designated have nonetheless lost correspondent relationships with major EU and US banks. The subsidiary’s bank account is, accordingly, a piece of the parent’s sanctions exposure even where the local entity isn’t doing anything otherwise sanctions-relevant.
The practical implications cut both ways. Upstream, the parents’ banks abroad may decline to send wires to certain Belarusian institutions, or apply enhanced scrutiny that delays routine transactions. Downstream, the subsidiary’s local bank may have limited capacity to receive payments from abroad in the parent’s home currency, or may want additional documentation that the local accountant isn’t accustomed to providing. The choice of a Belarusian bank is, for these reasons, a sanctions-relevant decision as much as an operational one.
Sectoral activity
Beyond named-person sanctions, the EU, US and UK have each adopted sectoral measures affecting specific sectors of the Belarusian economy — defence and dual-use goods, certain financial services, particular energy and natural-resources sectors, and others added in successive packages. A subsidiary whose business touches any of these sectors faces a sectoral question that named-person screening alone will not catch.
This is the area where we most strongly suggest engaging home-country counsel directly. The sectoral rules are technical, jurisdiction-specific, and amended in packages on a quarterly basis; an article cannot keep up with them and should not try. What we can say about the Belarusian-side picture: some sectors that look small from abroad — specialised manufacturing, particular financial-services lines, IT services with specific use cases — are exactly the ones most likely to be sectorally affected. Don’t assume the parent’s policy has fully accounted for what the subsidiary actually does.
Personnel and travel
A more subtle interaction. Secondments from the parent to the subsidiary, employment of Belarusian nationals on the parent payroll, board appointments crossing borders — all of these touch sanctions law in ways that vary by regime. The EU, US and UK each prohibit the provision of certain services to designated persons, and the boundary between “employment in Belarus” and “a service to a Belarusian-listed entity” isn’t always intuitive. Document legalisation and apostille work for cross-border employment arrangements often generates the paper trail that later gets scrutinised in a sanctions review. Keep the documentation clean from the start.
Wind-down and exit decisions
This is where the two regimes most visibly collide. A parent may want to exit Belarus to comply with its home-country sanctions policy, address shareholder pressure, or address internal risk tolerance. Edict 326 makes the exit itself a regulated transaction: Council of Ministers permission is required, the 25% budget payment applies, and transactions outside the permitted route are void.
Parents have, in practice, found themselves unable to move because the steps required to satisfy one regime conflict with the steps required to satisfy the other. This is the genuine impasse case. Resolving it requires both sides of the legal picture working together rather than sequentially, with home-country sanctions counsel and Belarusian counsel in direct contact. There is no clever route around it.
What the parent’s compliance team should reasonably want from a Belarusian LLC or other subsidiary on an ongoing basis comes down to a few items:
Most of this is straightforward to set up if it’s deliberate from the start. The cost of installing it after an incident is significantly higher than the cost of installing it on day one.
Most cases aren’t conflicts. They’re sequential compliance work — the Belarusian-law analysis runs first, the parent-side analysis runs second, and the answers don’t disagree. Some cases are genuine impasses and worth naming honestly.
A payment the subsidiary contractually owes that the parent’s policy or home-country sanctions prevents. This can produce contract risk locally that the parent cannot simply absorb.
A counterparty perfectly fine under Belarusian law but blocked under the parent’s home regime, where the subsidiary’s commercial relationship depends on continuing the dealing.
Exit decisions where home-country sanctions clearance and Belarusian permission both have to be obtained, sometimes with conditions pointing in opposite directions.
These are home-country-counsel cases. Belarusian-side counsel can be precise about what the Belarusian position requires; home-country counsel has to be the one resolving the cross-border conflict. We say this in every consultation that lands on one of these scenarios, because there isn’t a tidy answer that lets one side override the other.
To be plain about scope:
What we advise on: the Belarusian-side compliance picture for foreign-owned subsidiaries. The unfriendly-states regime, the share-alienation rules under Edict 326, dividend payment restrictions, currency-control documentation, and the operational compliance that any foreign-owned Belarusian subsidiary needs locally.
What you need home-country counsel for: the parent’s obligations under home-country sanctions law. Sectoral applicability. Licence applications to OFAC, OFSI, EU national competent authorities, and any cross-border opinions on conflicts between the two regimes.
This isn’t a soft handoff. The two pieces of advice involve different specialisms, and we’d rather coordinate cleanly with your home-country counsel than try to be a substitute for them.
This question gets asked at the start of nearly every consultation, and we never give a clean yes/no. The EU rules bind EU persons and EU-incorporated entities, and they reach certain non-EU activity with an EU nexus. The US picture is more varied — some OFAC programmes extend to non-US subsidiaries of US companies, others don’t, and which programme is in play matters more than the broad question. UK rules bind UK persons and carry their own extraterritorial provisions. The thread through all three: even where the subsidiary itself isn’t directly bound, what it does can create exposure for the parent. The technical answer belongs to home-country counsel. The operational rule we give clients is to run the local entity to the parent’s standard rather than trying to map each regime separately — it’s the only safe default.
Under Belarusian law, sanctions imposed by other states are not directly binding. A strictly Belarusian-law analysis would not block a transaction with a person designated by EU, US or UK sanctions. The constraint comes from the parent’s policy and any extraterritorial reach of the home-country regime. This is the most common scenario where the two regimes appear to disagree — and the resolution belongs to the parent, not the subsidiary.
This is the one that trips clients up most reliably. The US 50% rule is the cleanest version of the concept: any entity owned 50% or more — directly or indirectly — by one or more SDNs is itself treated as blocked, even where the entity isn’t named on the SDN List under its own name. The EU and UK use ownership-and-control tests that aren’t identical but reach similar territory. The practical consequence for the subsidiary’s counterparty screening: name-matching alone misses the risk. Ownership chains have to be chased too. We see Belarusian companies fairly regularly that look perfectly clean on the first pass and turn out to be blocked because of who sits behind them.
In several regimes, yes — depending on the parent’s jurisdiction, the ownership chain, and the nature of the subsidiary’s activity. Both EU and UK regimes have specific provisions on parent liability for subsidiary conduct in certain circumstances; US programmes likewise reach further than just US persons. Treat the subsidiary’s compliance as an extension of the parent’s, not a separate matter.
Exit is possible under Edict 326, but it requires Council of Ministers permission and a contribution of at least 25% of the market value to the local budget. The procedure is set; the timing isn’t always predictable. Many parents have found that the home-country sanctions clearance needed for the same exit overlaps awkwardly with the Belarusian permission process. Plan for both in parallel rather than sequentially.
Yes. Some Belarusian banks are themselves designated. Others have lost correspondent relationships with EU or US institutions, which makes payments between your subsidiary and your parent harder to process. Pick the bank with both operational reality and the parent’s sanctions position in mind, ideally before opening the account.
Yes, and the requirements come from the parent’s home-country regime rather than from Belarusian statutory accounting law. The Belarusian record set won’t be sufficient on its own. Counterparty screening records, ownership-and-control checks, and a documented escalation process are the additional layers most parents will want their subsidiary to maintain.
If you’re running a Belarusian subsidiary from an EU, US or UK parent and want a clean read on the Belarusian-side compliance picture, get in touch. We work with foreign parents and their home-country counsel together, in English, and we’ll provide a written picture of what your subsidiary’s local obligations look like, where they touch the parent’s sanctions exposure, and what records and screening processes the subsidiary should have in place.
The registration of a limited liability company is not always carried out personally by the founder. In practice, situations often arise when the business owner is outside the country, is busy with operational activities, or engages professional consultants to launch the company. In such cases, registering an LLC by power of attorney becomes the optimal […]
This article is a working compliance calendar for a Belarusian company — a one-page reference for the major filings a typical foreign-owned subsidiary makes each year. The promise in the title needs a small caveat up front: filings genuinely vary by company circumstances (tax regime, VAT registration status, company size, industry), so no single calendar […]
It’s a Tuesday in October. Your accountant in Minsk forwards three filing reminders before 10am. The bank wants beneficial-ownership confirmation by Friday. A tax-authority letter has been at the legal address for eleven days, and nobody has opened it. None of this was on your radar this morning. Most months your Belarusian subsidiary doesn’t appear […]
