European Court of Justice on the UBO-register
In our previous newsflash on the register of Ultimate Beneficial Owners (UBO), an overview was provided of some recent amendments to the Belgian legislation, which resulted from the transposition of the amended Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (hereinafter the “Directive”). One of the novelties introduced related to the access to the UBO-register, which was opened up to all citizens regardless of whether a legitimate interest could be demonstrated. Concerning the aforementioned principle, a landmark judgment was issued by the Court of Justice of the European Union (the “Court”) on 22 November 2022.
Background
The facts giving rise to the judgment was an application submitted by the beneficial owners of several companies to the Luxembourg Business Registers with a request to restrict access to information about said beneficial owners. These applications were rejected. The beneficial owners subsequently brought an action before the tribunal d'arrondissement de Luxembourg (Luxembourg Court of First Instance). That court referred a series of preliminary questions to the Court of Justice on the interpretation of certain provisions of the Directive and their validity in the light of the Charter of Fundamental Rights of the European Union (the “Charter”).
The ruling of the Court of Justice
The Court finds in the aforementioned judgment that the provision of the Directive, whereby Member States must ensure the general public’s access to information on beneficial ownership, is invalid. According to the Court, access of the general public to this information constitutes a serious interference with the fundamental rights enshrined in Articles 7 and 8 of the Charter, being the rights to respect for private life and to the protection of personal data.
The judgment is primarily addressed to the European legislator and the European Commission. The Commission has communicated that it is still studying the ruling. It remains to be seen what influence this recent jurisprudence shall have on European law and the legislation of the Member States of the European Union. But what is certain is that the Court's decision will be fundamental in the design and implementation of effective UBO registers moving forward.
Implications for Belgium
It remains to be seen what steps will be taken at the level of the European Union. However, the Belgian Federal Public Service Finance, in light of the aforementioned judgment, has issued a communication on its website announcing a temporary suspension of the access of the general public to UBO information.
KPMG Law frequently monitors questions about requirements concerning UBOs and updates clients continuously as needed.
Feel free to contact us if you have any questions.