Transparency or privacy? This was, in broad terms, the dilemma facing the Court of Justice of the European Union (CJEU) in relation to the Register of Beneficial Owners (RBO). It has now ruled in favour of privacy.
As a reminder, the RBO platform set up on 1 March 2019 is the result of the transposition of a European directive aimed at combating money laundering and terrorist financing. It demands that entities registered in the trade and companies register must identify and make public their beneficiaries. Everyone has access to it, anonymously.
An "interference with fundamental rights”
This information can be made confidential “when it is considered that there is a disproportionate risk to publish the beneficiaries compared to the risk of fraud,” Yves Gonner, director of the Luxembourg Business Registers (LBR), which manages the RBO, explained to Paperjam in a previous article. As of February 2022, of the 2,049 exemption requests received since the launch of the register, for 3,915 beneficial owners, only 40% had been accepted.
Hence the grumbling of some beneficiaries, who did not think it was normal for their information to be accessible in this way. Several complaints were lodged against the RBO.
They won their case because the CJEU ruled on Tuesday 22 November that the “provision that information on the beneficial owners of companies incorporated in the territory of the Member States must in all cases be accessible to any member of the general public” provided for in the European directive was “invalid”. “Access by the general public to information on beneficial owners constitutes a serious interference with fundamental rights to privacy and personal data protection,” it said. Interference that is “neither limited to what is strictly necessary nor proportionate to the objective pursued.”
A decision to be taken into account in national law
So what will happen to the GDPR? It will be up to the District Court of Luxembourg, which submitted preliminary questions to the CJEU after two appeals were lodged, to “resolve the case in accordance with the decision of the Court.”
“The ruling invalidates part of the anti-money laundering directive that we have transposed into Luxembourg law. Therefore, we will have to analyse in detail the consequences of this judgment for European law in this area and its effects on national law. Of course, Luxembourg will comply with European case law,” the justice ministry commented, without giving details on when or how. The LBR was unable to provide further information on the future of the RBO.
Since it is a provision of the EU directive that is considered invalid, the Commission itself should review it. When contacted, the Commission says it is “analysing the judgment”.
This story was first published in French on Paperjam. It has been translated and edited for Delano.