On 22 November 2022, the ECJ ruled that EU law granting general public access to information regarding UBOs constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data, and as such is invalid.
In response to a preliminary question raised by a Luxembourg District Court, the ECJ declared invalid the provision whereby information on the beneficial ownership of companies incorporated within the territory of member states will be accessible in all cases to any member of the general public. This is follow up to our recent Law-Now article on UBO registration requirements in the Czech Republic.
Public access to information on UBOs
The 4th Anti-Money Laundering (AML) Directive requires member states to ensure that the information on beneficial ownership is accessible in all cases to any person or organisation that can demonstrate a legitimate interest. The requirement of legitimate interest was removed by a later amendment in the 5th AML Directive, granting public access to information on the UBOs.
In the Czech Republic, a limited part of the UBO Register is accessible online and extracts may be freely downloaded by the general public. This part of the UBO Register discloses only a limited scope of information on UBOs: full name; month and year of birth; nationality; country of residence; and underlying characteristics of their position as UBO. Only obliged entities under the Czech AML Act (e.g. banks, notaries, tax authorities) have access to the full scope of information registered in the UBO register.
The ECJ argues that general public access is neither limited to what is strictly necessary nor proportionate to the objective pursued. In addition, the severity of interference with the fundamental rights regarding private life and the right to protection of personal data, and such interference is not offset by any just benefits.
The ECJ ruling, which is binding on the national courts of member states, emphasised the importance of striking a proper balance between the objective of the general interest pursued and the fundamental rights affected, and the crucial existence of sufficient safeguards preventing risks of abuse.
Impact of the ECJ ruling on the UBO Register
Following the judgment of the ECJ, some member states (e.g. Austria, Ireland, Luxembourg, Netherlands) have already closed public access to their respective UBO registers. The Czech UBO Register remains partially accessible to the general public, and the position of the public authorities remains unclear. The Ministry of Justice of the Czech Republic commented that it is currently analysing the situation and cannot yet confirm the form or the timing of the required amendments in the Czech Republic.
The ruling of the ECJ does not affect the obligation of entities to collect and record complete, accurate and up-to date data on its UBOs in the relevant registers and the existing compliance obligations remain in place.
For more information on the Czech AML Act, UBO Act and the ECJ ruling, contact your CMS client partner or local CMS experts: Lukáš Janíček, Markéta Franková, Magda Ullmann, Huyen Vuová.