The Court of Justice of the EU (“CJEU”) recently held that an anti-money-laundering (“AML”) directive that provides the general public with access to information on the beneficial ownership of companies incorporated within the territory of the Member State is invalid. The directive at issue is Directive (EU) 2015/849, a Luxembourg law adopted in 2019, which established a Register of Beneficial Ownership that contains material and financial information of beneficial owners collected for the purpose of preventing money laundering or terrorist financing in the EU. The directive makes certain beneficial ownership information contained in the Register accessible to the general public via the internet. The law also enables beneficial owners to request that Register administrators restrict access to this information in certain cases.
The judgment, which was delivered by the CJEU on November 22, 2022, relates to two actions before the tribunal d’arrondissement de Luxembourg (“Luxembourg District Court”) brought by a Luxembourgish company and its beneficial owner who are challenging the Register administrators’ decision not to restrict the general public’s access to information concerning them. The Luxembourg District Court petitioned the CJEU in order to obtain a preliminary ruling concerning the interpretation and validity of certain provisions in the directive.
The CJEU examined the directive in light of the Charter of Fundamental Rights of the European Union (“the Charter”) and determined that providing beneficial ownership information to the general public constitutes a serious interference with fundamental rights concerning the respect for private life and the protection of personal data in accordance with Articles 7 and 8 of the Charter, respectively. The court determined that, while the prevention of money laundering and terrorist financing is an legitimate objective of general interest and providing the public with access to this information does contribute to the success of this objective, the measure is not limited to what is strictly necessary and not proportionate to the objective pursued. The court compared the current version of the directive with the former regime, which limited access to beneficial ownership information to competent authorities and certain entities, as well as persons or organizations that were able to demonstrate a legitimate need for this information. The court determined that the added benefit derived from making the information publicly accessible does not outweigh the risks associated with the possible abuse of this information, which the court emphasized was made freely accessible to the public to be used, retained, and disseminated at will.