Public access to the Irish Register of Beneficial Ownership of Companies ("RBO") has been suspended. The suspension follows a landmark ruling in which the Court of Justice of the European Union ("CJEU") found that public registers containing the personal details of 'beneficial owners' of companies infringe the fundamental privacy and data protection rights of citizens.
The CJEU ruled that provisions in the 5th EU Anti-Money Laundering ("AML") Directive requiring Member States to ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territories is accessible in all cases to the general public is invalid. The CJEU ruling marks an important moment in the wider transparency v privacy debate.
The decision stemmed from two disputes concerning the Luxembourgish registry's refusal to restrict public access to certain information on its register. This ultimately led to the Luxembourgish court making a referral to the CJEU for a preliminary ruling on those elements of the 5th EU AML Directive legislating for almost unrestricted access to beneficial ownership information. Its predecessor, the 4th EU AML Directive, granted access only to public authorities and to those who could demonstrate a 'legitimate interest' in the fight against money laundering and terrorist financing.
In its decision, the CJEU:
- 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 enables 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 response, and in line with similar action taken across the EU, the Registrar of Beneficial Ownership of Companies halted the search facility of the Irish Beneficial Ownership Register. Work is now underway on restricting access to "Designated Persons" only.
The beneficial ownership regime attempts to increase transparency regarding ownership and control of companies and other legal structures. Complex corporate or trust arrangements can obscure the transparency of ownership. The evolving legislative regime had a number of important milestones:
- In April 2016, the UK introduced a version of a beneficial ownership regime (known as the 'PSC' regime) for UK companies and partnerships.
- In November 2016, the EU followed suit with its own beneficial ownership regime and, on the basis of this, Ireland introduced measures requiring companies to take steps to identify their underlying beneficial owners. Up to this point, the identity of the beneficial owners of Irish companies could remain largely private.
- In 2019, an enhanced EU disclosure regime was introduced, mandating public filings by companies with the newly established RBO.
- In April 2021, trusts became the subject of a new disclosure regime.
- In March 2022, Irish companies with UK property interests became obliged to comply with the Register of Overseas Entity regime.
Wider Implications of the CJEU's Ruling
Legislators must now examine the ramifications of the principles underlying the CJEU judgment, for example, to other types of corporate disclosures or to systems of automatic exchange of tax and other information. We can expect prolonged policy analysis and debate on this topic over the coming years.
In the meantime, Matheson advises corporates and other in-scope entities to continue, as normal, to:
- comply with the obligation to gather information;
- establish and maintain an internal beneficial ownership register; and
- file their beneficial ownership details in the RBO.
All these elements of the regime remain in force. We will keep you informed of any updates or developments in this area. If you have any questions about this issue, please get in touch with your usual Matheson contact.