In accordance with the anti-money laundering directive, a 2019 Luxembourg law established a register of beneficial owners, which included various information about the beneficial owners of registered companies and legal entities, some of which were publicly accessible, for example, on the internet. The directive required that these data be made accessible to every member of the public, which, however, the European Court of Justice ruled as a violation of fundamental rights.
Two lawsuits were filed before Luxembourg courts by a Luxembourg company and its beneficial owner, who requested that the competent authority, the Luxembourg Business Registers (LBR), restrict public access to the data in the register. The cases were referred to the European Court of Justice, which concluded that the provisions of the anti-money laundering directive did not comply with the fundamental rights set out in the Charter of Fundamental Rights of the European Union, as they represent an unjustified interference with the protection of privacy and personal data.
In its ruling, the European Court of Justice stated that the regulation seriously infringes the rights guaranteed in Articles 7 and 8 of the Charter with regard to the disclosure of information about beneficial owners. This data processing allows an unlimited number of individuals to access information about the owners’ financial and material situation, which could pose a serious risk to the individuals involved. The data is not only accessible but can also be stored and disseminated, further exacerbating the potential for misuse of personal data.
The Court emphasized that although the regulation aims to prevent money laundering and terrorism financing, thereby creating a more transparent environment, the accessibility of the data to the public is disproportionate to the intended objective. The intervention is not limited to the necessary extent and does not adequately ensure the protection of personal data.
The European Court of Justice highlighted that the new system of the anti-money laundering directive not only causes significantly more serious violations of fundamental rights than the previous system, but also fails to provide sufficient guarantees for the protection of personal data. According to the Court, the option for member states to publish beneficial owners’ data in an online register, and only in exceptional cases restrict access, does not ensure the proper balance between public interest and personal rights.
Therefore, the European Court of Justice concluded that the provision of the anti-money laundering directive, which required the full public disclosure of information about beneficial owners, is invalid as it does not align with fundamental rights.
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Dr. Katona Géza, LL.M. ügyvéd (Rechtsanwalt / attorney at law)
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Katona és Társai Ügyvédi Társulás
(Katona & Partner Rechtsanwaltssozietät / Attorneys’ Association)
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