ECJ ruling on company ownership branded a ‘setback’ in fight against crime

European court rules disclosure of beneficial owners’ identities is a ‘serious interference’ in privacy rights

Irish regulators are scrutinising a European court ruling that has prompted companies registrars in several member states to shut off public access to information on businesses’ owners.

The Court of Justice of the European Union (ECJ) this week ruled that public access to information on companies’ beneficial owners “constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data”.

The ruling, on an EU directive demanding that beneficial owners register their interests, prompted authorities in Luxembourg and the Netherlands to close public access to this information in their jurisdictions.

According to the Department of Enterprise, Trade and Employment, the Republic’s Register of Beneficial Ownership is considering the ruling and whether there are any implications for its operations.

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Since 2019, Irish law has required beneficial owners of companies and industrial and provident societies to register in line with the EU directive. The Companies Registration Office maintains the beneficial ownership register.

A beneficial owner is a person who ultimately owns or controls a company or other incorporated entity, or who has 25 per cent or more of it. The ownership can be direct, that is, held by the person themselves, or indirect, through companies or other corporate entities.

The European court was ruling on a challenge to an EU money-laundering and terrorist financing directive, demanding that member states make information on the beneficial owners of companies, and other legal entities incorporated in their jurisdictions, accessible in all cases to every member of the general public.

The court held that the directive was neither limited to what was strictly necessary nor proportionate to its aims of preventing money laundering and terrorist financing.

Its ruling states that the interference in privacy and personal data protection rights, enshrined in articles 7 and 8 of the EU’s Charter of Fundamental Rights, was more serious than previous anti-money laundering regimes.

However, the court added that this more serious interference brought no added benefit to efforts to combat money laundering or terrorist financing.

Published on Tuesday, the ruling names plaintiffs W and M, beneficial owners of Luxembourg property companies Yo and Sovim, who asked Luxembourg Business Registers to restrict access to their information.

When the registrar refused, they challenged this in Luxembourg’s courts, which referred the issue to the ECJ.

The ruling is binding on all national courts in the EU that face similar issues to those raised in the Luxembourg case.

John Devitt, chief executive of Transparency International Ireland, branded the ruling “the biggest setback” in 30 years for the fight against corruption, organised crime and tax evasion.

“The ECJ has ruled in favour of privacy rights for company owners over the public interest but appears to have paid little attention to the role of public registries in enabling investigations by media and civil society organisations into alleged money-laundering,” he said.

Lawyers for the plaintiffs declared the ruling a victory for data protection and against highly politicised transparency campaigns.

The EU passed the directive in 2018 to tackle the use of shell companies for financial crime and terrorist financing and to increase scrutiny of companies’ activities.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas