We wish to inform you that on 22 November 2022 the European Court of Justice (“CJEU”) ruled that the “public access” feature of the Luxembourg register of beneficial owners ( “RBO”) (as required under Article 30 of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU ( “AMLV”) is invalid in light of the Charter of Fundamental Rights of the European Union (the “Charter”) and more specifically that it constitutes a serious interference with the fundamental rights to private life and to the protection of personal data.
Furthermore, the CJEU also clarified that optional provisions which allow Member States to make information on beneficial ownership available on condition of online registration and to provide for derogations from public access to that information in exceptional circumstances are not in themselves capable of demonstrating either a proper balance between the objective of general interest pursued and the fundamental rights enshrined in the Charter or the existence of sufficient safeguards enabling data subjects to protect their personal data against the risks of abuse.
What is to be expected as a result of this?
Technically speaking, only the “public access” requirement of the Luxembourg RBO, pursuant to the AML V has been found to be invalid. The remaining provisions of the law of 13 January 2019 establishing the register of beneficial owners (“RBO Law”) shall therefore not be affected by this court decision.
Otherwise said, the RBO will remain unaffected in all of its other components, so that the required beneficial ownership filings will continue to be made with the RBO, along with the necessary updates, when required (in order to avoid potential criminal sanctions).
Which kind of access from now on?
As the public access feature of the RBO stems from AML V (i.e. that such ruling should affect all the other EU beneficial ownership registers as well), one may expect that AML V as well as the RBO Law will need to be adequately amended in that respect.
It remains to be seen whether we will now revert back to a regime governing access rights that is more aligned with the previous mechanism provided for by Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing ( “AML IV”) (which, in addition to an access right for competent authorities and obliged entities, also provided an access for any third party demonstrating a legitimate interest).
Regardless of the above and since the invalidity only relates to the public access feature of the RBO, the Luxembourg manager of the RBO (i.e. the Luxembourg Business Registers ( “LBR”) has swiftly issued a press release to that effect, indicating also that while it will duly take into account the outcome of such ruling going forward, it will have to review the ruling in closer detail in order to draw all rightful conclusions therefrom.
For the time being the LBR has suspended any access to the RBE and also indicated that it would be working on a solution to continue to allow obliged entities under the AML/CFT law to swiftly gain access to the RBE again in order to be able to comply with their professional obligations in this field.
For many clients who had initiated court proceedings due to the fact that their motion for a restriction of public access had been denied, as many of them were pending the outcome of this ruling, although the CJEU has effectively put an end to unrestricted public access to information regarding beneficial owners (and thus removed the underlying grounds for such proceedings) it remains yet to be seen how these cases will be handled going forward and brought to a final and conclusive decision by the Luxembourg courts.
Please do not hesitate to get in touch with your main contact person at the level of the firm to discuss this in further detail but also for any possible follow-up question that you may have.
Author: Jean Wivenes