The Court of Justice of the European Union has ruled that beneficial owners of registered companies can remain anonymous, in a blow to anti-corruption efforts. 

According to the court, the general public’s access to information on beneficial ownership of registered companies constitutes ‘a serious interference with the fundamental rights to respect for private life and to the protection of personal data’, the ECJ said in a statement.

In a decision on Tuesday, the court was asked to rule on the validity of a provision in the 2015 anti-money-laundering directive. Complying with the directive, Luxembourg adopted a law in 2019 which established a Register of Beneficial Ownership.

Information on the beneficial owners of registered entities had to be entered and retained in that register, the court heard.

The ECJ was told that some of the information was accessible to the general public on the web.

Two actions were brought by a Luxembourg company and its beneficial owner, which had previously unsuccessfully requested to restrict the public’s access to their information. 

The Luxembourg District Court referred questions to the ECJ on whether the disclosure of such information was capable of entailing a disproportionate risk of interference with the owner’s fundamental rights.

In a statement, the ECJ said: ‘The provision of the anti-money-laundering directive whereby member states must ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territory is accessible in all cases to any member of the general public is invalid.

‘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, respectively. 

‘Indeed, the information disclosed enables a potentially unlimited number of persons to find out about the material and financial situation of a beneficial owner.

‘Furthermore, the potential consequences for the data subjects resulting from possible abuse of their personal data are exacerbated by the fact that, once those data have been made available to the general public, they can not only be freely consulted, but also retained and disseminated.’

The court added that the EU legislature was pursuing a legitimate objective in attempting to prevent money laundering and terrorist financing, but said the interference entailed by the measure went beyond what was strictly necessary or proportionate.

Campaigners said that the decision was a blow to beneficial ownership transparency which set the fight against cross-border corruption back by years. Maíra Martini, corrupt money flows expert at Transparency International, said: ‘Access to beneficial ownership data is vital to identifying – and stopping – corruption and dirty money. The more people who are able to access such information, the more opportunity to connect the dots. 

‘We have seen time and time again, from the Czech Republic and Denmark to Turkmenistan, how public access to registers helps uncover shady dealings.  At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.’

 

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