European justice puts a brake on financial transparency

It is an unexpected decision, at the same time as a serious blow to financial transparency within Europe itself. In a stop delivered on Tuesday 22 November, the Grand Chamber of the Court of Justice of the European Union (CJEU) – its plenary assembly, which brings together fifteen judges – invalidated a legislative provision allowing the general public to consult the registers of beneficiaries of companies created in the European Union (EU).

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The Court was called upon to rule on this subject, after being seized by the district court of Luxembourg: two plaintiffs, owners of companies registered in the Grand Duchy, had indeed objected to their personal data being freely accessible.

The fact, for any citizen, whatever he is, to consult the basic information relating to these entities – name of their owners, month and year of birth, country of residence and nationality – had been made possible within the framework of the 5e Anti-Money Laundering Directive of 2018. The European legislator aspired to combat the proliferation in the EU of shell companies run by straw men, allowing individuals or criminal networks to conceal assets derived from tax evasion or corruption.

“Serious interference”

The measure, acclaimed by NGOs, is now being called into question. In its judgment, the Court considers that everyone’s accessibility to such registers goes against the Charter of Fundamental Rights of the Union and “constitutes a serious interference with the fundamental rights to respect for private life and the protection of personal data”as enshrined in this text, adopted in 2000. Part of the information disclosed by the registers of beneficiaries could, she continues, allow a “potentially unlimited number of people to get informed” on the financial situation of company owners.

The Court also considers that the necessary proportionality between transparency and privacy is not respected. If we follow his reasoning, improving the fight against money laundering and the financing of terrorism does not necessarily imply the accessibility to all of registers revealing the identity of the real owners of companies. In the minds of the judges, this mission “is primarily the responsibility of public authorities and (…) financial institutions”which can keep access to the information in the registers.

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