ECJ holds that public access to information on beneficial ownership is a serious interference with fundamental rights

The European Court of Justice (ECJ) published a judgment earlier this week confirming that the general public’s access to information on beneficial ownership constitutes a serious interference with the EU’s Charter on Fundamental Rights to respect for private life and to the protection of personal data. The judgment referred to the 5th Anti-Money Laundering Directive (5th Directive). Under the 5th Directive, Member States must ensure that the information on the beneficial ownership of corporate and other legal entities is accessible in all cases to any member of the general public. The ECJ held that this provision is invalid.

Gibraltar introduced a set of Regulations establishing a UBO register in 2017 in line with the 4th Anti-Money Laundering Directive (4th Directive). These Regulations were then amended by the transposition of the 5th Directive. The Regulations allow a competent authority, financial intelligence unit, obliged entities and a member of the public to make a request to inspect the information on the UBO Register.

Previously this information was accessible by “a person or organisation that demonstrates a legitimate interest”. The notable change was the amendment to “a member of the public” as part of the transposition of the 5th Directive.

The ECJ found that the purpose of this measure was to create an environment of increased transparency that would prevent money laundering and terrorist financing. However, the ECJ concluded that the interference entailed by this measure was considerably more serious than that entailed by the previous regime, and it was neither limited to what is strictly necessary nor proportionate to the objective pursued.

The ECJ acknowledged the optional provisions allowing Member States to make information available on the condition of online registration and to provide exemptions in exceptional circumstances, but this did not go far enough to tip the balance.

Gibraltar may no longer be within the EU but it was the first EU jurisdiction to implement the 4th Directive and continually strives for financial transparency. It will be interesting to see if this judgment leads to a change in industry standards on the public accessibility of UBO registers and how Gibraltar reacts to this. It may be as simple as reverting back to the previous wording which required a person to demonstrate that they have a legitimate interest in the information. Watch this space!

 https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-11/cp220188en.pdf