In 2022, the Court of Justice of the European Union (CJEU) issued a preliminary judgment ruling that public access to information on beneficial ownership of companies incorporated in EU member states constitutes a “serious interference with the fundamental rights to respect for private life and to the protection of personal data”. It further held that public access to personal data as required under the EU’s 5th Anti-Money Laundering Directive (5AMLD) goes beyond what is strictly necessary and is disproportionate to the objectives pursued in the fight against money laundering and terrorist financing.
Within only a couple of hours – in some cases even minutes – after publication of the ruling, Luxembourg, the Netherlands and other members states suspended public access to their BO registers.
While the ruling specifically addresses public access to BO registers under 5AMLD, its wider impact has become clearer in the meantime.
The Crown Dependencies of Jersey, Guernsey and the Isle of Man, as well as the Overseas Territories – most notably the BVI, Cayman, Bermuda, and Turks & Caicos – have delayed public access to their registers following the CJEU ruling. All of them are currently seeking legal advice on the matter, and it is unclear if and when public access will be implemented. These countries had committed to the UK to introduce public access by the end of 2023.
In contrast, the UK government, considering that the CJEU ruling is not binding on the UK, has confirmed that public access to UK registers of persons of significant control and registrable beneficial owners is not violating basic human rights to privacy and confidentiality of personal data. They will continue with their regime of unlimited public access, and data will not be deleted from the registers if control or ownership cease to exist, but merely will be archived after a legal delay.
In the European Union, some countries have partially restored access to their registers, for example Luxembourg, where limited access for certain categories of professionals was re-opened. Ireland has suspended access to the general public, with partial access on demand for designated persons. Other countries, like France, did not take any action following the CJEU ruling and maintain public access to their central BO register. The Netherlands and Cyprus, as of the day of writing these lines, still have blocked access to their register for all members of the public.
Not being a European country but worth mentioning in this context is the US BO register introduced in the United States under Corporate Transparency Act, entering into force on 1 January 2024 and establishing uniform beneficial ownership information reporting requirements for certain types of legal entities created in or doing business in the United States. The FinCEN will be authorized to collect information and disclose it to authorized government authorities and financial institutions, but not to members of the public.
Equally worth mentioning is Switzerland where a bill on increased transparency and easier identification of beneficial owners is currently being drafted. The new bill will introduce a central register of beneficial owners of legal entities and provide further clarity on the identification of beneficial owners. Importantly, the Federal Council has in its announcement set out that the Swiss central register will not be accessible for the general public.
In the meantime, the EU Council will consider the CJEU ruling in their upcoming 6th Anti-Money Laundering Directive draft. It seems likely that public access will be ruled out, and access will be granted to persons with legitimate interest. However, what exactly constitutes a “legitimate interest” is still being subject to debate.
In conclusion, the CJEU ruling on the invalidity of public access to registers of beneficial ownership has had a wide impact in the EU member states, but also beyond. While some members have re-opened public access partially, some non-EU states on the other hand are delaying the entering into force of public access and instead seek legal advice after this landmark ruling. Other countries, like the UK and France, reconfirm their position on the maintenance of public access. All in all, the situation seems rather confusing.
In the meantime, the EU Council is still debating how to proceed, and it remains to be seen whether public access within EU members states will be re-established, or if access to personal data of beneficial owners will be limited to persons with a legitimate interest (whatever that may actually mean) or to authorized authorities only.
Jessica Schaedler
Leading trust advisor at Capital Trustees AG
Sources
Cyprus Department of Registrar of Companies and Intellectual Property
Netherlands Government Information
Ireland Central Register of Beneficial Owners