Ireland's legislative response to the controversial Sovim decision has been published in a move likely to reignite the debate about trade-offs between corporate transparency and privacy rights.
Since December 2022, public access to the Irish Register of Beneficial Ownership of Companies ("RBO") has been on hold, a situation reflected across several EU member states. (Read more here).
New access rules
An amending statutory instrument signed by the Minister for Finance in recent days sets a surprisingly high bar for access to information held on the RBO. A person must make a formal submission satisfying the Registrar of Beneficial Ownership of Companies that:
- the person is engaged in the prevention, detection or investigation of money laundering or terrorist financing offences
- they seek access to the information in pursuit of those aims (but not necessarily related to live administrative or legal proceedings against the entity concerned), and
- the entity under scrutiny is connected with those convicted of money laundering or terrorist financing offences, or holds assets in a high-risk third country (as defined).
While the new measures would seemingly allow investigative journalists and advocacy groups to access information in limited circumstances connected with established criminal activity, others wishing to look into company ownership on a more general level, for example in the context of transacting with or acquiring the company, will have that avenue closed off.
Why has this happened?
In the Sovim decision, the CJEU (Court of Justice of the European Union) ruled that parts of the 5th EU Anti-Money Laundering ("AML") Directive requiring member states to ensure open access to beneficial ownership information concerning companies was invalid. The 4th EU AML Directive had only mandated access to public authorities and to those who could demonstrate a 'legitimate interest' in the fight against money laundering and terrorist financing.
In Sovim, the CJEU reined in the expansive reach of the 5th AML Directive and:
- ruled that general access to personal information constituted 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, respectively, of the EU Charter of Fundamental Rights
- observed that the information disclosed on the national register enabled a potentially unlimited number of persons to identify the material and financial situation of a beneficial owner, and may lead to abuse of their personal data
- acknowledged the legitimate goal of the EU legislature in seeking to prevent money laundering and terrorist financing by creating an environment less likely to be used for those purposes and
- found, nonetheless, that the interference with individuals' fundamental rights was disproportionate and extended beyond what was strictly necessary to achieve to the objective of the measures.
In practical terms, Irish companies must continue to comply with their underlying obligations to gather and maintain beneficial ownership information. This means:
- complying with the obligation to gather information
- establishing and maintaining an internal beneficial ownership register and
- filing beneficial ownership details in the RBO.
We expect that "designated persons" will retain their current level of access to the register, and look forward to seeing the RBO response to these legislative changes.
We will keep you informed of developments in this area. If you have any questions about this issue, please get in touch with your usual Matheson contact.