AML Directive: ECJ prohibits access of information on the beneficial ownership of companies to general public

The Anti-Money Laundering Directive (EU) 2015/849 (hereinafter “AML Directive”), adopted by the EU legislator on 20 May 2015, aims to prevent money laundering and terrorist financing by creating an environment that might less easily be abused for these purposes through increased transparency. Among other things, the AML Directive requires each EU Member State to create a register of beneficial owners of companies. In such a register, a range of information on the beneficial owners of companies is to be recorded and stored. The general public is to have access to part of this information, inter alia, via the internet.

On 22 November 2022, the European Court of Justice decided in the case Luxemburg Business Registers (Joined Cases C-37/20 & C-601/20, to be published) that the general public’s access to information on beneficial ownership of companies constitutes a serious interference with the fundamental rights to the respect of private life and to the protection of personal data, enshrined in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union – the EU Catalogue of Fundamental Rights (hereinafter: “EUCFR”). The EUCFR binds the EU and its Member States and is not to be confused with the European Convention of Human Rights (ECHR), to which Switzerland is also a party. Therefore, the ECJ held that, in the light of the EUCFR, the provision of the AML Directive whereby EU Member States must ensure that the information on the beneficial ownership of companies and other legal entities incorporated within their territory is accessible in all cases to any member of the general public is invalid.

The ECJ held that with the adoption of the AML Directive, the EU legislator pursued an objective of general interest capable of justifying even serious interferences with the fundamental rights enshrined in Art. 7 and Art. 8 EUCFR, and that the general public’s access to information on beneficial ownership is appropriate for contributing to the attainment of that objective. However, the Court held that the interference entailed by that measure is neither limited to what is strictly necessary nor proportionate to the objective pursued.

As the Court stated in its press release, 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 EU Commission, is no reason for the EU legislator to provide for the general public to access the information in question. The Court adds that the optional provisions allowing EU Member States to make beneficial ownership information available on condition of online registration are not in themselves capable of demonstrating a proper balance between the general interest objective and the existence of sufficient safeguards to enable data subjects to protect their personal data effectively against the risk of abuse.

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Thursday, 21 March 2024
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