EU Court of Justice strikes down public access to beneficial ownership registries

The Court of Justice of the European Union ruled last week that public access to registries showing personal details about companies’ beneficial owners infringes fundamental individual rights otherwise protected by the EU.

The Court of Justice said the EU’s 2018 requirement for Member States to grant public access to information on beneficial ownership caused “serious interference with the fundamental rights to respect for private life and to the protection of personal data.”

Those rights and their protections are set out in the EU’s Charter of Fundamental Rights.

The case involved a law Luxembourg enacted in 2019 to meet the EU’s requirement to create public registries of beneficial ownership. The Luxembourg law gave the public online access to its registry.

Under the law, a beneficial owner could request the registry’s administrator to restrict access to personal information in certain cases. The owner of 35 companies and an investment firm requested anonymity. He argued that public disclosure of his identity would expose him to risks of fraud, kidnapping, or death.

The Luxembourg registry administrator denied the owner’s request. After a local court upheld the administrator’s denial, the beneficial owner appealed to the EU Court of Justice.

In its November 22 decision, the Court of Justice acknowledged that requiring public access to beneficial ownership registries increased transparency and could help prevent money laundering and terrorist financing.

But the court said the EU parliament’s objective in adopting the so-called 5th anti-money-laundering directive didn’t justify the “serious interferences with the fundamental rights enshrined” in the EU Charter.

The “interference entailed by that measure is neither limited to what is strictly necessary nor proportionate to the objective pursued,” the court said.

Transparency International said the ruling shielding anonymous companies from public scrutiny was a “disappointing twist . . . effectively reversing progress of recent years.”

The London-based advocacy group, Tax Justice Network, said the EU court’s decision “will again conceal swathes of transparency data only recently made available to the public following years of campaigning and policy negotiations.”

The group expects “beneficial ownership blackouts” immediately across the EU.

A partner from the Luxembourg law firm that led the appeal to the Court of Justice called the ruling a “victory for data protection and the rule of law in an extremely politicized context.”

The firm said the decision could also have “practical implications” in the UK, where existing public registries of beneficial owners may conflict with GDPR protections.

In its ruling Tuesday, the EU Court of Justice said even when Member States allow exemptions from public access to personal information about beneficial owners, there aren’t “sufficient safeguards enabling data subjects to protect their personal data effectively against the risks of abuse.”