European countries begin to take down public company registers after a ruling

European countries have begun scrapping public records of who owns their companies following a shock court ruling that campaigners have condemned as a major step backwards in the fight for corporate transparency and economic crime.

Luxembourg and the Netherlands on Wednesday closed their public beneficial ownership registers, which show the ultimate owners of their companies, following a European Court of Justice ruling that invalidated public access.

Its judgment stated that “public access to beneficial ownership information constitutes a serious interference with the fundamental rights to respect for private life and the protection of personal information,” according to a press release from the court.

Luxembourg’s online directory showed a brief message on Wednesday indicating it had been “temporarily suspended” following the court order. A similar message appeared on Holland’s page.

Campaigners said the decision removed an important tool in the fight against kleptocracy and abuse of shell companies. Máira Martini, an expert on corrupt money flows at the non-profit Transparency International, said it “takes us back years”.

“Access to beneficial ownership data is critical to identifying – and stopping – corruption and dirty money. The more people who have access to such information, the greater the opportunity to connect the dots,” she said.

Brussels first introduced public registries with anti-money laundering rules in 2018. It vowed to tackle the use of shell companies for terrorism and financial crimes and increase civil society monitoring of companies.

The court’s ruling puts it at odds with the UK, which was one of the first countries in the world to implement a public real estate register in 2016. Another government bill on economic crimes, now going through the UK parliament, will force these business owners out. to verify their identity as well, following long-standing criticism of the accuracy of information in the company register.

Thom Townsend, chief executive of Open Ownership, said: “The UK’s corporate transparency regime, if new legislation is passed to give Companies House the power to verify the data it holds, could well be ahead of the EU.

The European Court of Justice was asked to rule on the case following complaints from a number of individuals and companies who appealed to the Luxembourg Register to have their names withheld. The ruling, which names two plaintiffs WM, the beneficial owner of the Luxembourg real estate company Yo, and Sovim SA, which is also registered in the state.

In a statement, Mishcon de Reya lawyer Filippo Noseda, who represented one of the appellants, said it was “a victory for data protection and the rule of law in a highly political context”.

He added that “prominent public campaigns by highly organized and single-minded anti-transparency campaigners” had “hampered” the principle of proportionality.

In a statement on Tuesday, the European Commission said it was taking note of the ruling, would “analyze the consequences in detail” and was “ready to work with the co-legislators to ensure full compliance with the judgment”.

Martini said the court had recognized that civil society and the media had a legitimate interest in accessing the information, given their fight against money laundering, meaning “all is not lost”.

Roland Papp, head of policy at Transparency International, said the European Parliament should urgently “incorporate detailed provisions that reconcile public access with privacy and security concerns” in the new anti-money laundering rules.

Leave a Comment

Your email address will not be published. Required fields are marked *