- The ECJ declared the obligation to make information on beneficial owners publicly available across the board invalid.
- Publication constitutes a serious infringement of the fundamental rights to privacy and data protection (Charter Art. 7 – 8).
- Transparency objectives are legitimate and appropriate, but the measure is not necessary and therefore disproportionate.
- Alternatives: restricted access for media, money laundering prevention organizations and potential contractual partners; Switzerland is planning a non-public register.
European money laundering law has – until now – been based primarily on corresponding directives, which have been constantly developed further. The 5th Money Laundering Directive (RL 2018/843) required Member States to ensure that the Information about the beneficial owners, among others, for the public are accessible, at least the name, month and year of birth, country of residence and nationality of the beneficial owners and the nature and extent of the beneficial interest.
Two companies had requested the Luxembourg Business Registers to bar the public from disclosing information on beneficial ownership, unsuccessfully. They subsequently sued before the Tribunal d’arrondissement de Luxembourg, which referred to the ECJ the question of whether the Transparency regime of the 5th Money Laundering Directive compatible with the Charter of Fundamental Rights and the GDPR is.
The ECJ has now – on November 22, 2022. in Joined Cases C‑37/20 and C‑601/20, decided as followsthat the aforementioned transparency requirement is invalidinsofar as it requires Member States to make available to the public at least the information on beneficial owners in all cases and, optionally, other information.
The ECJ assumed that the publication data would provide a Intervention fundamental rights according to Art. 7 and 8 of the EU Charter, which would even serious is because the data can be used to create a more or less comprehensive profile, and the data can be retained and disseminated and used for any purpose.
It is true that such interference can be legitimized under certain circumstances. There was a legal basis in the 5th Directive, the core content of fundamental rights was not affected, the transparency provisions have a reasonable objective, namely to create an environment that is unfavorable to money laundering, and they are also suitable for achieving this objective.
But they are not absolutely necessary and therefore disproportionate. Difficulties in determining the exact conditions for public access do not justify making the data available to the public on a blanket basis. One could also limit access to the media, to organizations with the purpose of preventing money laundering or terrorist financing, and to potential contractual partners of a company.
In Switzerland, the FDF is to draft a bill by the end of June 2023 to “increase transparency and facilitate the identification of beneficial owners of legal entities”. This is intended to introduce a register for the identification of beneficial owners, which, however, is not to be publicly accessible (see here).
Further information on the subject can be found at Stephanie Müller, The Publicly Accessible Transparency Register, Contra Legem 2019/2..