The Court of Justice of the European Union (ECJ) has ruled that a provision of the Anti-Money Laundering Directive (Directive (EU) 2015/849 of the European Parliament and of the Council (20 May 2015)) is void.
This directive provided that information on the beneficial owners of companies incorporated in the territory of the Member States should be systematically accessible to the general public, with the aim of preventing the use of the financial system for money laundering or terrorist financing.
By the introduction of national legislation EU jurisdictions have put in place beneficial owner registers where information concerning the beneficiary may be accessible to the general public. The directive allows limiting access to such information in certain cases, in particular where disclosure would put individuals at risk. Monaco has in place equivalent legislation.
The Court of Justice has recognised that the general public’s access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data, enshrined in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union. The Court holds that the interference entailed by that measure is neither limited to what is strictly necessary nor proportionate to the objective pursued of seeking to prevent money laundering and terrorist financing.
It also added that conditioning access to this information on an online registration process, or on the establishment of exceptional exemptions would not guarantee the protection of personal data and will therefore not be acceptable alternatives.
Whilst it remains for each member state Member State to consider its own national laws it is likely that they will be guided by this ECJ decision and unless this decision is overturned they will no longer be able justify the access of this information to the general public.
It is surprising that it has taken such a long time since the introduction of the directive for the ECJ to rule on its validity, whilst The European Data Protection Board (EDPB) has remained silent despite being seized on the subject. It is recognized that information on beneficial ownership may be a useful tool to fight against crime, however this remains a role of governments and anti-laundering authorities rather a role of the public. The registers of beneficial ownership will remain accessible to the governments and anti-laundering authorities, as well as to the compliance departments of banks and obliged entities. This “cost-benefit analysis” should have been undertaken prior to the introduction of the legislation, and should have been cross-checked by the EDPB.
Malta and the Netherlands have already suspended public access to their registers (which remain accessible to the authorities and certain professionals). Luxemburg initially suspended access but later partially reopened it to public with legitimate interest.
The EU Finance Ministers reacted to these moves by saying that the registers should be open to anyone who can demonstrate a 'legitimate interest' in the personal data they contain and that this should include journalists and civil society organisations that are 'connected with' the prevention and combating of money laundering.
We will follow closely how this develops in the following months.
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