By: N. Pirilides & Associates LLC
With a recent judgment given on 22 November 2022 in joined cases C-37/20 and C-601/20, the Court of Justice of the European Union (CJEU), while evaluating articles 7 and 8 of the Charter of Fundamental Rights of the European Union, has ruled that public access to the registers of Beneficial Owners infringes the rights to respect of private life and to the protection of personal data.
The judgment reverses the amendment to the Fourth Anti-Money Laundering Directive (AMLD) introduced on 30 May 2018 by the Fifth AMLD.[1] The said amendment imposed an obligation to Member States to offer full access of the Beneficial Owner registers of companies and of other legal entities incorporated within their territory, to the public in a collective effort to regulate and mitigate money – laundering and terrorist financing by increasing transparency. While Article 30 (9) of the AML Directive 2018 granted Member States the option to provide for an exemption right to restrict the access to all or part of a Beneficial Owner’s information, applicable only in exceptional circumstances.
In its findings, the CJEU, has concluded that full public access to the registers is not proportionate to the rights preserved by the aforementioned articles 7 and 8, due to the fact that the access is unrestricted and not limited to necessity. Nor did the possibility to provide for an exemption right as granted by Article 30 (9) was found proportionate. Indeed, the amendment enabled a vast percentage of the public to be aware of a Beneficial Owner’s material and financial situation in a click of a button, consequently rendering them exposed to potential abuse.
Recognising, however the greater objective pursued by the amendment, the CJEU attempted to balance the rights enclosed in articles 7 and 8 and the need of preventing money – laundering and terrorist financing. This was achieved by allowing access to Beneficial Owner registers where a legitimate interest can be proved.
What could be defined as “legitimate interest” and how it can subsequently be proved sparked commentary, however as per the CJEU’s suggestion within the judgment, application of the legitimate interest notion must be careful and meticulous. Noted shall be however that as the Court highlighted, where it is justifiable, the necessary interferences in regard to the said rights shall be allowed pursuant to the enforcement of AML Directives and their objectives that undoubtedly constitute general interest.
Cyprus, along with several other Member States, in accordance to the judgment given last week, has as of 23 November 2022 suspended full public access to the Beneficial Owner Register by releasing a statement in the website of the Department of Registrar of Companies and Intellectual Property on 28 November 2022. Access of course is still given to competent and supervisory authorities and the Unit as referred in article 12 of Directive R.A.A. 112/2021 and amending Directive R.A.A. 116/2022, with the addition that any obliged entities also have to attach a solemn declaration confirming that the relevant information is requested “within the context of performing customer due diligence”.
[1] Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering and/or terrorist financing.
