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EU court orders UBO-register to be closed to the public

  • Europe
  • Corporate

23-11-2022

 

The European Court of Justice (the Court) has ruled that the provision of the European Anti-Money Laundering Directive (the Directive) - which provides that the information of the beneficial ownership of companies incorporated within the European Union shall be made accessible to the general public in all cases – constitutes a serious interference with the fundamental privacy and personal data protection rights as laid down in the EU Charter of Fundamental Rights.

In a national case against the Luxembourg Business Registers, the Luxembourg District Court requested the Court for a preliminary ruling regarding the interpretation and validity of certain provisions of the Directive in light of the EU Charter of Fundamental Rights. This ruling has implications for EU Member States as well as the EU legislative institutions.

The Court ruled that while the UBO (Ultimate Beneficial Ownership) register pursues an objective of general interest that may justify an interference with fundamental rights, the measure goes beyond what is strictly necessary and is disproportionate to the objective pursued. The privacy of UBOs is violated by the disclosure of personal data and Member States must have appropriate safeguards in place to protect the privacy and personal data of UBOs.

This ruling could have major implications for UBO-registers throughout the EU. In the Dutch context, for example, the Dutch Minister of Finance has requested (effective 23 November 2022) the Dutch Chamber of Commerce to put the disclosure of information from the UBO-register on hold. Until further notice, the Dutch Chamber of Commerce has suspended the ability to access the Dutch UBO-register. However, Dutch anti-money-laundering institutions still have the legal obligation to consult the UBO-register before entering into a professional relationship. The ruling does not affect the obligation for Dutch legal entities to register their UBOs and this obligation therefore remains in place.

Please see the full ruling here.