Transparency of data on ultimate beneficial owners VS respect of private and family life

Current legislation on transparency of data on ultimate beneficial owners

The AML Directive[1] stipulates that Member States must ensure that information on the ultimate beneficial owners of businesses and other legal entities that have been registered in their territory is in any case accessible to anyone in the general public.

The primary aim of the AML Directive is to prevent money laundering and the financing of terrorism, in particular by increasing the transparency of data on the ultimate beneficial owners.

In the Slovak Republic, information on ultimate beneficial owners is provided through the Register of Legal Entities ("RPO") and the Register of Public Sector Partners ("RPSP").

the obligation to register the ultimate beneficial owners in the RPO applies to all companies, the obligation to register in the RPSP applies only to those companies that do business with the State.

Proceedings at the CJEU

As the Luxembourg District Court considered that the publication of ultimate beneficial owners data may pose a disproportionate risk of infringing the fundamental rights of ultimate beneficial owners, the Luxembourg District Court addressed a number of preliminary questions to the CJEU concerning the interpretation of certain provisions of the AML Directive and their validity in the light of the Charter of Fundamental Rights of the European Union (the "Charter").

In particular, the CJEU has considered the question of whether data on the ultimate beneficial owners should be accessible to anyone in the general public.

Conclusion of the CJEU

The CJEU, in its judgment dated on 22 November 2022 in the joint preliminary ruling WM
(C-37/20), Sovim SA (C-601/20) vs Luxembourg Trade Register, found invalid the provision of Article 30 (5) lit. c) of the AML Directive, which provides that Member States must ensure that information on the ultimate beneficial owners of businesses and other legal entities is accessible in any event to anyone in the general public.

The CJEU in the judgment stated that access by the general public to information on the ultimate beneficial owners represents a (disproportionate) serious interference to the fundamental rights to private life and protection of personal data enshrined in Articles 7 and 8 of the Charter. The CJEU also stated that the principle of transparency cannot be regarded as an objective of general interest which justifies interference with the fundamental rights guaranteed by the Charter. According to the CJEU, the “fight” against money laundering and terrorist financing is primarily a matter for public authorities.

The CJEU has thus ruled that access to data on ultimate beneficial owners should not be unrestricted and available to anyone.

Impact of the CJEU judgment

Following this judgment, EU Member States will have to restrict access by the general public to data on ultimate beneficial owners.

How the Slovak Republic itself will deal with this judgment is still questionable. However, it can be assumed that the access of the general public to data on the ultimate beneficial owners will have to be restricted, since under the current legislation it is relatively easy to identify the ultimate beneficial owners and their detailed personal data.

[1] Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018.