On 22 November 2022, the Grand Chamber of the European Court of Justice (ECJ) ruled to restrict public access to data on the ultimate beneficial ownership (case C-37/20).

The ECJ ruled that the provisions of the Anti-Money Laundering Directive 2018/843 are invalid to the extent they provide that Member States must ensure the information on the beneficial ownership of companies incorporated within the EU territory is in all cases accessible to any member of the general public. 

Disclosure to the general public implies that information on the ultimate beneficiaries (such as name, year and month of birth, country of residence and nationality, as well as the nature and extent of the rights held in the companies) may be made available without restrictions. This may lead to the misuse and disclosure of sensitive personal data for purposes unrelated to the prevention of money laundering and terrorism financing. Such regulation is not justified from the point of view of the privacy of the beneficiaries.

The ECJ recognized the non-compliance of the provision of the EU Directive itself with the Charter of Fundamental Rights of the European Union (the "Charter"), and not with the national legal rules implementing the Directive. The Kingdom of the Netherlands and Cyprus have already suspended unlimited information provisions for the public. 

The ECJ ruled that although the general interest in preventing money laundering and terrorist financing is strong and can justify even severe restrictions on fundamental rights, the measure is disproportionate to its objective. The fight against money laundering and terrorist financing falls primarily within the competence of public authorities and of entities such as credit and financial institutions, which are subject to specific obligations as a result of their activities.

This important precedent was established following an application to the Court by a Luxembourg citizen, whose arguments were upheld. According to the Court, the general public’s access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and the protection of personal data, enshrined in Articles 7 and 8 of the Charter, respectively.

According to the original revision of Directive 2015/849, the data on the final beneficiaries had to be disclosed only upon submission of a legitimate interest. However, due to difficulties in harmonising the assessment of justification, this restriction was dropped in 2021.

It is likely that national legal acts of the EU Member States will have to amend without delay to comply with the recent ECJ precedent. Otherwise, a wave of litigation against the public registries could follow.

We believe that a precedent formed by the CJEU has properly balanced the anti-money laundering and personal privacy interests. 

You can find the official ECJ press release here.

Information prepared by Laura Čereškaitė-Kinčiuvienė