15. 2. 2023

Ultimate Beneficial Owners Shrouded in Mystery

In November 2022 the Court of Justice of the EU adopted a groundbreaking ruling, invalidating a provision of the AML Directive allowing general public to access information on beneficial ownership of companies. The argumentation of the Court was based on the fact that publication of names and other data of beneficial owners interferes with the person’s right to respect for private and family life and the right to the protection of personal data, since the information disclosed enables a potentially unlimited number of persons to find out about the material and financial situation of a beneficial owner.

This ruling was enough to trigger significant changes in several national beneficial owner registries (e.g. in Luxembourg, the Netherlands, Belgium, Austria, Ireland, Malta), which were made (completely or partially) unavailable to the public with immediate effect.

The decision sparked a wave of criticism from anticorruption organizations, as it takes the fight for transparency of company owners, as well as the fight against money laundering in the EU, years back.

As regards the Czech register of ultimate beneficial owners, anybody can still access the entries without limitation. However, the Czech Ministry of Justice as operator of the register is currently analyzing the impacts of the ruling.The following are offered as options for further action: (i) the public access to the register will remain unaffected, (ii) the access will be limited (e.g. by the condition of registration, payment of a fee, proving of legitimate interest), or (iii) the register will be closed for the general public, i.e. access will be allowed merely for (public) institutions obliged to verify beneficial ownership of entities.

Whatever the verdict of domestic authorities, it will anyhow have impact solely on the scope of the disclosed data and the definition of persons, who will have access to the records. The obligation of registration of ultimate beneficial owners as well as sanctions for failure to do so, will remain unaffected.

It remains to be seen, which approach the Czech Ministry of Justice will take. Nevertheless, making the register partially inaccessible could provide an incentive for hesitant beneficial owners to finally register.

By Mgr. Denisa Molnár

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G&P Newsletter 1/2023 (PDF)

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Mgr. Denisa Molnár

Mgr. Denisa Molnár

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