European Court of Justice (ECJ) invalidates the access of the general public to the Register of Beneficial Ownership (RBO)
On 22 November 2022, the Court of Justice of the European Union (the “ECJ”) invalidated the provision of the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending the Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the “5th AML Directive”), whereby the information on the beneficial ownership of companies incorporated within the territory of the Member States is accessible in all cases to any member of the general public.
The ECJ’s judgment has been rendered with reference to two preliminary rulings brought by the Luxembourg District Court for the invalidation of article 30, paragraph 5 first paragraph, point (c) of the 5th AML Directive but not calling into question the transposition of said directive into the Luxembourg law, as Luxembourg legislation (i.e. the Luxembourg law of 13 January 2019 establishing the beneficial owner register, the “Law”) is in line with the provisions of said directive.
The Law established a register of beneficial ownership and provided that a whole series of information on the beneficial owners of registered companies must be recorded in that register. Some of this information was publicly available and in particular via the Internet. In addition, the Law provides that a beneficial owner may request the Luxembourg Business Register (i.e. the authority in charge of keeping of the beneficial owner register) to restrict access to such information in certain limited cases.
According to the ECJ, the general public 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, as set forth in articles 7 and 8 of the Charter of Fundamental Rights of the European Union (the “Charter”).
The ECJ finds that, although, the 5th AML Directive pursues an objective of general interest, the general public access to information on beneficial ownership is inappropriate, unnecessary and disproportionate to the objective to be achieved.
Furthermore, ECJ adds that the optional provisions which allow Member States to make information of beneficial ownership available on condition of (i) online registration and (ii) under exceptional circumstances, an exemption from access to that information by the general public, respectively, are not capable themselves of demonstrating a balance between the objective of general interest and the fundamental rights guaranteed by the Charter or the existence of sufficient safeguards for the beneficial owners to protect their personal data against the risk of abuse.
Immediately following the above judgment, as an interim measure, the Luxembourg Business Register reacted and temporarily suspended public access to the beneficial owner register. While this judgment still needs to be studied in detail, the Luxembourg Ministry of Justice is considering allowing access to the register of beneficial ownership to certain Luxembourg professionals only (including without limitation banks, lawyers, notaries, auditors, insurers, accountants etc).
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