EU Ends Public Access To Beneficial Owner Registers

The court’s latest ruling further complicates effective due diligence efforts

Last week, the Court of Justice of the European Union (CJEU) invalidated certain provisions of the EU’s 5th Anti Money Laundering Directives (AMLD), which had allowed public access to beneficial ownership information for EU companies. The court ruled that these provisions had posed a “serious interference” to its citizen’s right to privacy. The judgment stemmed from two legal challenges filed in 2020 by companies in Luxembourg – an EU member state which has been criticised by governance advocates such as Transparency International for purportedly facilitating tax evasion, money laundering and other financial crimes.

With the CJEU’s latest ruling, access to beneficial ownership (or “UBO") data in the EU is expected to revert to guidelines laid out by the 4th AMLD in 2015, which states that only persons with a “legitimate interests” can use these registers. Who exactly has a “legitimate interest” is not spelled out, but the CJEU in its more recent ruling has suggested it could extend to journalists and civil society members, as well as for due diligence purposes.

Nonetheless, governance advocates and industry observers have expressed concerns that the ruling will introduce another layer of complexity to corporate transparency and conducting due diligence in the EU; in recent years publicly available UBO data has been used to expose potentially nefarious connections between leading European and international politicians and business people. At the time of writing, countries such as Austria, the Netherlands, Belgium and Luxembourg have already taken down their beneficial owner registers following the CJEU’s ruling, and more member states are expected to follow.

While the dust has yet to settle on the ruling, it seems likely that interested parties will need to go through a registration procedure to demonstrate their “legitimate interests” in accessing UBO data for a specific company. The exact processes for doing so are yet to be made clear, though it appears almost certain that gathering company data in the EU will become a more costly and time-consuming process.

At the same time, banks, law firms and corporates alike continue to shoulder the regulatory and reputational responsibility of knowing who they are dealing with and the individuals behind their counterparties. The CJEU has not watered down these requirements, even if it has created further hurdles.