CJEU ruling and its impact on UBO registers

Following the recent court ruling by the Court of Justice of the European Union (CJEU), several member states have started shutting down their public registers of ultimate beneficial ownership (UBO). This ruling has generated significant discussion and controversy within the anti-money laundering (AML) community.

Background on the CJEU ruling and its impact on UBO registers

Before the court ruling, UBO registers were publicly accessible in 20 EU countries. However, the ruling has invalidated a provision of the Fourth Anti-Money Laundering Directive, which requires member states to ensure that information on beneficial ownership of corporate and other legal entities is accessible to the general public. The CJEU held that this public access constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data. The affected EU countries have begun suspending their public registers. As of November 30, 2022, the Benelux countries, Austria, Germany and Ireland had already suspended their public registers.

Setback for transparency and accountability in the fight against money laundering

The ruling is a significant setback for transparency and accountability in the fight against money laundering and cross-border corruption. The AMLD 5, which was introduced in 2018, had made the EU anti-money laundering legislation the most progressive at the time, as it provided for public access to UBO registers. However, the CJEU’s decision has now erased such progress, according to Maira Martini, a corrupt money flows expert at Transparency International. The question now is who can access UBO registers. Under the ruling, individuals or groups with a “legitimate interest” in information from UBO extracts can access the register. However, the CJEU has yet to clarify the definition of “legitimate interest” and specifics of who is allowed access to such data.

Access to UBO registers under the CJEU ruling

It is essential to understand that the CJEU ruling does not undermine the obligation of EU member states to collect and store information related to beneficial ownership. It merely restricts public access to such information. The authorities in member states will still have access to UBO registers, and this information will be available to law enforcement agencies and other relevant bodies.

In conclusion, the CJEU’s recent ruling on public registers of UBOs has created significant controversy and setback to the fight against money laundering and cross-border corruption. While it restricts public access to UBO registers, it does not affect the obligation of member states to collect and store information related to beneficial ownership. The CJEU is yet to provide clarity on the definition of “legitimate interest” and who is allowed access to such data, leaving the future of UBO registers uncertain.

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