In its judgment of 22 November 2022 in Joined Cases C-37/20 and C-601/20, the European Court of Justice (“ECJ“) ruled that public access to the transparency register, which had been introduced by the amendment of Article 30(5), subparagraph 1, lit. c of Directive (EU) 2015/849 (“Fourth Anti-Money Laundering Directive“) by Directive (EU) 2018/843 (“Fifth Anti-Money Laundering Directive“), is not valid and constitutes a serious interference with EU fundamental rights.
According to the original wording of the Fourth Anti-Money Laundering Directive, personal data of beneficial owners were only accessible to competent authorities and financial intelligence units, obliged entities in the context of the fulfilment of customer due diligence obligations and to any person or organisation that can demonstrate a legitimate interest. The amendment by the Fifth Anti-Money Laundering Directive provided that the transparency registers and thus to personal data of beneficial owners should be accessible to the general public without the need to demonstrate a legitimate interest in order to more effectively prevent the use of the financial system for the purpose of money laundering and terrorist financing
In Luxembourg, persons concerned as beneficial owners whose personal data (including name, nationality, date of birth, place of birth) are recorded in the Luxembourg transparency register, the Registre des bénéficiaires effectifs, in accordance with the law of 13 January 2019 establishing the beneficial owner register (and implementing the Fifth Anti-Money Laundering Directive) had complained about this accessibility to the general public, referring to Articles 7 and 8 of the Charter of Fundamental Rights of the European Union, i.e. the right to respect for private and family life and the right to protection of personal data, but their complaint had been dismissed.
After being referred for a preliminary ruling by the Tribunal d’arrondissement de Luxembourg, which was then seised of the matter, the ECJ has declared the provisions of the Fifth Anti-Money Laundering Directive imposing an access for the public to the transparency registers as invalid. As a consequence, corresponding national laws (i.e. laws and regulations implementing the said provisions under the Fifth Anti-Money Laundering Directive into national law) are inapplicable in the sense that the amendments under the Fifth Anti-Money Laundering Directive “should be regarded as never having taken place” (Communications Directorate of the Court of Justice of the EU, ‘Review of the judgment in joined cases C-37/20 and C-601/20’ published on LinkedIn on 6 December 2022).
The reactions to the ECJ ruling of 22 November 2022 in the EU member states were correspondingly quick. For example, in addition to the register in Luxembourg, public access to the transparency registers in Belgium, Germany, Greece, Ireland, Malta and Austria has now also been suspended, and we can assume that EU member states are currently looking to find practical solutions in view of organizing access to beneficial owner information for persons and organisations with a legitimate interest (as provided for by the Fourth Anti-Money Laundering Directive).
This quick reaction is not surprising as the ECJ did not show any understanding in its reasoning for the fact that the European legislator insufficiently took into account fundamental principles of data protection law when deleting the requirement of a legitimate interest as a prerequisite for access to the transparency register through the Fifth Anti-Money Laundering Directive in 2018. In particular, the ECJ is not convinced by the Commission’s argument that the criterion of “legitimate interest” is a concept that is difficult to lend itself to a legal definition and that is difficult to implement, as well as that its application could lead to arbitrary decisions. “(…) In that regard, it must be noted that the fact that it may be difficult to provide a detailed definition of the circumstances and conditions under which the public may access information on beneficial ownership is no reason for the EU legislature to provide for the general public to access that information (…).”
The ECJ’s decision of 22 November 2022 in Joined Cases C37/20 ‑and ‑C601/20 is likely to generate some more discussion but is currently occupying national authorities mainly with the technical implementation of the new access restrictions to national transparency registers.
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