The Court of
Justice concluded that the provision in the Anti-Money Laundering Directive
which outlines that any member of the general public can have access to
information on the beneficial ownership of companies incorporated within the
territory of the Member States, is invalid.
The Court received
two requests in separate proceedings, first between WM and Luxembourg Business Registers (‘LBR’) (Case C‑37/20) a Luxembourgish company, and secondly between Sovim SA and
LBR (Case C‑601/20), its beneficial owner, to give a preliminary ruling on the
access to information on the beneficial ownership of companies. LBR and Sovim
SA had previously requested the Luxembourg Business Registers (LBR) to restrict
the general public’s access to information concerning them on the ground that
the general public’s access to that information would seriously, actually and
immediately expose WM and his family to a disproportionate risk and risk of
fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation.
In Case
C-37/20, the LBR disputed this claim on the basis of Article 15 of the
Luxembourgian Law of 13 January 2019 establishing a Register of Beneficial
Ownership. Article 15 provides:
‘A registered entity or a
beneficial owner may request, on a case-by-case basis and in the following exceptional
circumstances, by way of a duly reasoned application addressed to the
Administrator, that access to the information listed in Article 3 be restricted
to national authorities, credit institutions, financial institutions, bailiffs
and notaries acting in their capacity as public officers, where access to that
information would expose the beneficial owner to disproportionate risk, risk of
fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation,
or where the beneficial owner is a minor or otherwise legally incapable.
LBR ruled that WM
cannot rely on the phrase “exceptional circumstances” or any of the risks
referred to in this article. The referring court raised the question of the
interpretation to be given to the concepts of ‘exceptional circumstances’,
‘risk’ and ‘disproportionate’ risk within the meaning of Article 30(9) of
Directive 2015/849 as amended. Such article outlines that public access to
beneficial ownership information allows greater scrutiny of information by civil
society and would also help investigations on money laundering, associated
predicate offences and terrorist financing.
In Case
C-601/20, Sovim also lodged an application with the LBR pursuant to Article 15
of the law of 13 January 2019 indicating that the aims of Directive 2015/849 as
amended, are to identify the beneficial owners of companies used for the
purposes of money laundering or terrorist financing, as well as to ensure
certainty in commercial relationships and market confidence. However, it has
not been shown how granting the public entirely unrestricted access to the data
held in the RBO enables those aims to be attained. Sovim explained that public
access to personal data contained in the RBO constitutes an infringement of
several provisions of the GDPR, in particular a number of fundamental
principles set out in Article 5(1) thereof.
The referring
Court said that although several questions have already been referred to the
Court in Case C‑37/20, the proceedings in Case C‑601/20 also raised other
issues, in particular that of whether the general public’s access to some of
the data in the RBO is compatible with the Charter and also with the GDPR.
In a judgement
delivered by the Court of Justice of the EU on the 22nd November 2022, said
Court stated that 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 which are
enshrined in Articles 7 and 8 of the Charter.
On the one
hand, the Court of Justice entailed that the EU legislature seeks to prevent
money laundering and terrorist financing by pursing an objective of general interest
and that the general public’s access to information on beneficial ownership is
appropriate for contributing to the attainment of that objective. However, on
the other hand, the Court held that the interference entailed by that measure
is neither limited to what is strictly necessary nor proportionate to the
objective pursued. The new regime introduced by the Anti-Money-Laundering
directive amounts to a considerably more serious interference with the
fundamental rights guaranteed in Articles 7 and 8 of the Charter than the
former regime, which provided access to any person demonstrating a legitimate
interest.
The Court
ruled that the fact that it may be difficult to provide a detailed definition
of the circumstances and conditions under which such a legitimate interest
exists, relied upon by the Commission, is no reason for the EU legislature to
provide for the general public to access the information in question. The Court
added that the optional provisions that allow Member States to make information
on beneficial ownership available on the condition of online registration and
to the general public, in exceptional circumstances, do not demonstrate a
proper balance between the objective of general interest pursued and the
fundamental rights enshrined in Articles 7 and 8 of the Charter.
On these
grounds, the Court of Justice ruled that the Article 1(15) of Directive (EU)
2018/843 which provides thatMember States must ensure
that information on the beneficial ownership of companies and of other legal
entities incorporated within their territory is accessible in all cases to any
member of the general public, is unfounded.
written by Cedric Mifsud and Jodie Darmanin