OUR INSIGHTS AT A GLANCE
- By ruling that granting public access to the RBE and related information was not compliant with EU Law, the CJEU has shuffled the decks of the Luxembourg set-up and processes of the Luxembourg RBE and more generally of the EU beneficial owners registers.
- Indeed, the access to the RBE has been temporarily limited to specific categories of persons and both the Luxembourg and EU legislations regarding the public access to the RBE data will have to be amended to comply with the CJEU decision.
In its judgment of 22 November 20221 (the "Judgment"), the Court of Justice of the European Union ("CJEU") ruled that the public access to the Luxembourg register of beneficial owners (Registre des Bénéficiaires Effectifs, the "RBE") is invalid in so far as it constitutes an interference with the rights guaranteed in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union (the "Charter"). Following the Judgment, the access to the RBE was first blocked and then restricted to specific categories of persons.
This article will focus on the Judgment, the new procedure to access the RBE and the possible way forward.
The RBE has been established in Luxembourg by the law of 13 January 2019 (the "RBE Law"), as part of the implementation of Directives 2015/849/EU ("AMLD IV") and Directive 2018/843/EU ("AMLD V"). Article 30 (3) of AMLD V requires Member States to make all information concerning beneficial owners (the "BO") of corporate and legal entities available to the public.
While a few years ago Luxembourg was often critisised for a lack of transparency, when implementing the AMLD into domestic law, the Luxembourg legislator decided to go beyond the minimum imposed by AMLD V and become more transparent than some of its European neighbours by granting free public access to the RBE.
Indeed, the RBE Law provides that the following information on BOs shall be made available to the public free of charge on the RBE website (the "BO Information"):
- first name(s);
- nationality (or nationalities);
- date and place of birth;
- country of residence;
- nature and % of interest held in the entity.
Therefore, until 22 November 2022, any person could connect on the RBE website and obtain the BO Information on any company registered with the Luxembourg Trade and Companies Register (the "RCS") simply by enterring the name of the company or its registration number.
One limitation to accessing the BO Information is granted by Article 15 of the RBE Law which provides that a registered entity or a BO may request that the BO Information may only be accessible to national authorities, credit and financial institutions and court bailiffs and notaries acting in their capacity as public officers. Said limitation is granted only on a case-by-case basis and upon sending a duly motivated request to the Luxembourg Business Register ("LBR") explaining the exceptional circumstances requiring an exemption and, namely, exposing the BO to a disproportionate risk, to the risk of fraud, abduction, blackmail, extortion, harassment, violence or intimidation or where the BO is a minor or is otherwise incapacitated.
By passing its Judgment, the CJEU ruled that the general public's access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data, enshrined in Articles 7 and 8 of the Charter, and therefore that Art 30 (5) of AMLD V is invalid. The Court motivated its ruling by explaining that the necessary balance and proportionality between privacy and transparency had not been respected.
According to the CJEU, it cannot be considered that the interference with the rights guaranteed in Articles 7 and 8 of the Charter, which results from the general public's access to information on beneficial ownership, is limited to what is strictly necessary. It is worth mentioning that the Charter should be treated pari passu with EU primary legislation and, therefore, the provisions of AMLD V cannot contradict the provisions of the Charter.
Therefore, the fight against money laundering and financing of terrorism being the objective of AMLD IV and AMLD V, should not necessarily entail the public's access to information on the identity of the BOs of companies. The Judgment has shuffled the decks of the access rules to EU BO registers and has granted a great opportunity to Member States to limit the access to their national register of beneficial owners.
The reaction of the LBR
The LBR, which manages the RBE, reacted swiftly to the CJEU Judgment and decided to block the access to the RBE, whilst setting up a new procedure. The LBR has been followed by other EU Member States such as Malta, Austria, Belgium and the Netherlands.
On 19 December 2022, the LBR issued Circular LBR 22/01 implementing a new procedure (the "New Procedure") restoring the access to the RBE by "Professionals" within the meaning of Article 2 of the amended law of 12 November 2004 on the fight against money laundering and financing of terrorism (the "AML Law").
In order to get access to the RBE, Professionals now have to execute an agreement with the LBR (the "LBR Agreement") and use a product issued by Luxtrust SA allowing identification.
One point of interest concerns the use of the RBE data by Professionals. Indeed, according to the LBR Agreement:
- Professionals may access RBE data only in the scope of their AML/KYC obligations; and
- Professionals may re-use the RBE data provided that it is not contrary to public order and other applicable laws such as the General Data Protections Regulation.
Journalists who have a legitimate interest in consulting the RBE data within the context of their research may request access to the RBE on the basis of an agreement between the LBR and the Press Council. This is a major change for journalists, considering that prior to the New Procedure they had public access, which allowed them to gather considerable information leading to major investigations such as "OpenLux" realised by the newspaper "Le Monde" in conjonction with other European newspapers.
More recently, on 1 February 2023, the LBR established a procedure for entities to access their own RBE data by means of a confidential code valid for a period of three years. This code has been/will be sent progressively by post to the head office of each registered entity, registered with the RBE. Entities will only be able to have access to and order extracts concerning their own data.
By allowing RBE access to both Professionals and entities registered with the RCS, the LBR found a quick solution to comply with the CJEU Judgment. However, this solution is only transitory, and both the Luxembourg and European legislators will need to find a more suitable solution in the long term.
The way forward
In March 2023, the Financial Action Task Force ("FATF") released its guidance on beneficial ownership of legal entities (the "BO Guidelines"). In the section "Access to Information", the FATF mentioned that, while countries may consider facilitating public access to basic and beneficial ownership information, they should also take into account data protection rules and other privacy concerns as well as considering limiting which basic and beneficial ownership information is made publicly available, or applying a tiered approach to information disclosure based on legitimate interest.
The sixth AML/CFT Directive ("AMLD VI") included within the AML/CFT legislative package adopted by the European Commission on 20 July 2021 is probably the best opportunity for the EU legislator to amend the provisions of AMLD V regarding the public access to BO information. The European legislator may be tempted to use the concept of legitimate interest mentioned in the FATF BO Guidelines. On the one hand, this solution would ensure that the access to BO information always respects the proportionality principle. On the other hand, this solution could be very cumbersome for Member States considering that each demand will need to be reviewed on a case-by-case basis.
Even if grey zones are still to be clarified by the European legislator in the near future, one thing is certain: it is more than likely the end of the public access to RBE data as we knew it for only a few years of existence!
1. In joined cases C 37/20 (WM and LBR) and C 601/20 (Sovim SA and LBR).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.