The Court of Justice ruled in a recent judgment (CJEU 22 November 2022, C-37/20 and C-601/20, WM and Sovim SA v Luxembourg Business Registers) that public access to information on beneficial owners via the UBO register constitutes a serious interference with the fundamental rights to respect for private life and the right to the protection of personal data (Articles 7 and 8 of the Charter of Fundamental Rights of the European Union). According to the Court, this entails a disproportionate risk for beneficial owners and the provision to give access to the UBO register in all cases is invalid.
What is the UBO register?
Since the fourth European Anti-Money Laundering Directive, every European Member State has been required to set up a UBO register. UBO refers to “Ultimate Beneficial Owner”. Based on the UBO register, it is possible to find out who the owner, an interested party or the person who has control within a company is. The UBO register provides access to information about the economic ownership of registered entities and aims to create transparency within corporate structures to combat money laundering, terrorist financing and fraud. For several years now, every company in Belgium has been required to register its beneficial owners in the UBO register (access via https://financien.belgium.be/nl/E-services/Ubo-register).
Judgment of the Court of Justice of 22 November 2022
Following a refusal by the “Luxembourg Business Registers”, the administrator of the UBO register in Luxembourg, of requests for exclusion from public access to beneficial ownership information, the Luxembourg court has asked preliminary questions on the validity of the provisions of Union law on the regulation of public access to beneficial ownership information.
In the judgment, the Court of Justice ruled that the provision of the Anti-Money Laundering Directive which regulates the general public’s access to the UBO register is incompatible with the fundamental right to respect for private life and the right to the protection of personal data. Public access to beneficial ownership information constitutes an interference with private life by allowing an unlimited number of persons to obtain information on the material and financial situation of beneficial owners, without beneficial owners having knowledge of the (fraudulent) purposes for which the personal data is used. The free provision of this personal data to the general public may lead to the misuse of personal data, as information on the material and financial situation of the beneficial owners may be retained and disseminated by anyone.
An interference with respect for private life and the right to the protection of personal data can be justified only if an objective of general interest is pursued and the measure is appropriate, strictly necessary and proportionate. While the Court recognises that public access to beneficial ownership information is appropriate to contribute to the fight against money laundering and terrorist financing, the Court finds that the interference with fundamental rights goes beyond what is necessary and is not proportionate to the objective pursued.
What is the impact of the judgment on the Belgian UBO register?
Although the ruling of the Court of Justice concerns the invalidity of public access to the UBO register in Luxembourg, this also has an impact on all the other European Member States. For example, there is a temporary suspension of public access to the information of ultimate beneficial owners in the Belgian UBO register. Public consultation of the UBO register has been temporarily suspended since 22 November 2022. Only the tax administration and other competent authorities still have access to the UBO register.
However, the suspension of public access to beneficial ownership information does not affect the requirement for legal entities to register and annually confirm UBOs. This can also be done through the digital securities register eStox which BOFIDI Accountants can draw up for you.
Our Bofidi experts will be happy to assist you.
Do you have specific questions about this new temporary suspension or general questions about the UBO register? Please do not hesitate to contact us.
The Bofidi Legal team will be happy to assist you.
This article was written by Jenny Cheung.