In November the Court of Justice of the European Union ruled that public access to beneficial ownership registries showing personal details infringes on fundamental individual rights protected by the EU. The court said that the EU’s 2018 requirement for Member States to grant public access to information on beneficial ownership caused “serious interference with the fundamental rights to respect for private life and to the protection of personal data.”
In the ruling the court stated that “the provision whereby the information on the beneficial ownership of companies incorporated within the territory of the Member States is accessible in all cases to any member of the general public is invalid”.
The court felt that the requirement as established did not adequately balance the public’s need to know with individuals’ right to privacy. It did not totally rule out public access to beneficial ownership data.
Anti-corruption advocates including Transparency International view this as a setback. In a world where money laundering is increasingly complex the added restrictions to initiatives for locating hidden assets are problematic.
According to Open Ownership:
“Internationally, the evidence is clear: public registers of beneficial ownership information deliver benefits for anti-corruption, provide a fair and transparent trading environment for businesses, and help increase trust in government. In practice, giving easy access to this information is by far the most efficient way to ensure all relevant users – from investigative journalists to foreign law enforcement officials – can access and use beneficial ownership information and achieve their aims.”
Maíra Martini, corrupt money flows expert at Transparency International, said:
“Access to beneficial ownership data is vital to identifying – and stopping – corruption and dirty money. The more people who are able to access such information, the more opportunity to connect the dots. We have seen time and time again, from the Czech Republic and Denmark to Turkmenistan, how public access to registers helps uncover shady dealings. At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.”
Sadly recent progress across the EU establishing beneficial ownership repositories is now stalled and in some cases reversed.
According to Transparency International:
The judges did agree, however, that civil society and media play a role in the fight against money laundering, and that they have grounds for accessing such data. We’ll use this to make sure that no unscrupulous actor can dispute our right to unmask and hold them accountable.
Tracking of beneficial owners remains a critical tool for combating money laundering.
We have suggested a voluntary, private register of trusts in NZ as a starting point. This would allow some experimentation before any proposals to make it public.
There are valid reasons for maintaining privacy – sometimes trusts are used for illegitimate children or for genuine commercial confidentiality. Full public disclosure would be fine in a perfect world, but it could be a very blunt instrument. As a starting point, disclosure in a way that is accessible to law enforcement and regulators would be a good starting point.