European Court of Justice rules on Beneficial Owner Registers
In a judgment dated 22 November 2022, the European Court of Justice (ECJ) has decided that open public access to the beneficial owner registers of EU member state companies is no longer valid, as it is in contravention of articles 7 and 8 of the Charter of Fundamental Rights of the European Union (the Charter).
Under the amendment to the Fourth Anti-Money Laundering Directive (AMLD) introduced by the Fifth AMLD on 30 May 2018, EU Member States were required to make the beneficial owner registers fully accessible to the public. Under the Fourth AMLD, the register was only accessible to members of the public who could show a legitimate interest. In a clearly reasoned judgment, the ECJ took the view that:
- Given the public free access 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.
- By seeking to prevent money laundering and terrorist financing, the AMLD is pursuing an objective of general interest capable of justifying even serious interferences with the fundamental rights enshrined in Articles 7 and 8 of the Charter, and that the general public’s access to information on beneficial ownership is appropriate for contributing to the attainment of that objective.
- However, the interference entailed by the Fifth AMLD amendment is neither limited to what is strictly necessary nor proportionate to the objective pursued and is therefore invalid.
It would appear that the effect of the judgment is that the provisions of the Fourth AMLD now apply such that a legitimate interest needs to be proved. Interestingly, the ECJ commented that the fact that the legitimate interest concept may be difficult to define was not a reason to do away with it. There is a suggestion, therefore, in the judgment that care needs to be taken to delineate that concept carefully when applying it.
However, it is also clear that the ECJ considers the prevention of money laundering and terrorist financing as an objective of general interest and one that would justify a certain level of interference with fundamental rights of privacy and protection of personal data.
The judgment is all the more interesting for being in contradiction of the opinion of the Advocate General published in January 2022, something which is unusual and perhaps explains why the judgment was quite long in being finalised.
Almost immediately, EU member states have started blocking access to their beneficial owner registers for companies. It remains to be seen whether the AMLD may be further amended in an attempt to allow public access in situations beyond where there is a legitimate interest.
The official press release can be found here.
The ECJ Decision can be found here.