• news-banner

    Expert Insights

When Protection Of Personal Data Supersedes Anti-Money-Laundering Regulations

In May 2018, the EU Legislator adopted its 5th anti-money-laundering directive[1] to make information on beneficial owners of companies available to any member of the general public.

As a Member State of the EU, Luxembourg implemented this directive and adopted in 2019 a law[2] establishing a Register of Beneficial Ownership freely accessible on the internet.

Following this adoption, a Luxembourgish company and its beneficial owner both challenged the validity of this disclosure before the Luxembourg District Court on the grounds that it violates the right to respect for private life and to the protection of personal data, rights guaranteed by Articles 7 and 8 of the EU Charter of Fundamental Rights (“the Charter”).

In that context, the Luxembourgish Court made a request to the Court of Justice of the European Union (“Court of Justice”) for a preliminary ruling concerning the interpretation of the provisions of the EU anti-money-laundering directive and their validity with respect to the Charter.

In its judgement C-37/20 / C-601/20 of 22 November 2022, the Court of Justice states that any interference with a fundamental right must be based on a legal provision, must not undermine the essential content of the fundamental right, must have an objective of general interest and must be proportionate to the aim pursued.

According to the Court of Justice, granting access to the general public to information on beneficial ownership constitutes a serious infringement of the fundamental rights guaranteed by Articles 7 and 8 of the Charter. As a matter of a fact, disclosing this kind of information to an unlimited number of people could expose the subjects of the data to potential abuse. Indeed, once that data has been made available, it is impossible for the subjects of the data to protect themselves, the said data being not only freely consultable, but also retainable or massively spreadable.  

After noting that such an interference is based on a legal provision (the EU anti-money-laundering directive) and that it does not affect the essential nature of fundamental rights, the Court of Justice focuses on the objective of general interest which is also provided since the EU Legislator seeks to prevent money laundering and terrorist financing by increasing transparency and thus creating an environment less likely to be used for such activities.

However, in the interests of proportionality, the Court of Justice holds that while granting public access to the data is able to prevent money laundering and terrorist financing, it is neither limited to what is strictly necessary nor proportionate to the objective pursued.

Indeed, the previous regime provided limited access to beneficial owner information to the competent authorities, certain entities and to any person or organization having a legitimate interest. But it was dropped by the EU Legislator because the requirement of a “legitimate interest” implied practical difficulties. The Court of Justice states that the difficulty to provide a detailed definition of the circumstances and conditions under which such legitimate interest exists cannot justify public access to this information. The Court of Justice concludes that the fight against money laundering is the responsibility of public authorities and financial institutions. Making information on beneficial owners available to the public is thus not justified by a proper balance between the objective of the general interest pursued and of the fundamental rights infringed.

On these grounds, the Court of Justice rules that the provision of the new EU anti-money-laundering directive which provides that information on the beneficial ownership of corporate and other legal entities incorporated within the territory of a Member State has to be accessible in all cases to any member of the general public is invalid.

One can wonder if this European issue will ever be discussed under Swiss law. These questions should however not arise since a project of law aiming to increase transparency and facilitate the identification of beneficial owners of companies is in progress. In particular, it should provide for the introduction of a central identification register of beneficial owners, but only accessible to the competent authorities[3].


[1]             Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ 2015 L 141, p. 73), as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 (OJ 2018 L 156, p. 43)
[2]               Loi du 13 janvier 2019 instituant un Registre des bénéficaires effectifs (mémorial A 15) (Law of 13         January 2019 establishing a Register of Beneficial Ownership)  
[3]           Communiqué du Conseil fédéral du 12.10.2022, Le Conseil fédéral entend renforcer la transparence des personnes morales (Press releases by the Federal Council of 12.10.2022, Federal Council wishes to increase transparency of legal entities)

Our thinking

  • London International Disputes Week: Trusts hurt: the fraud lawyer, the trust, and the avenues of attack (and defence)

    Tamasin Perkins

    Events

  • London International Disputes Week: Navigating International M&A Disputes: Insights and Strategies for 2025

    Stephen Burns

    Events

  • The Law Commission: Modernising Wills Law Report - a disputes perspective

    Lydia Kember

    Quick Reads

  • Retrospectively changing Indefinite Leave to Remain rules for those currently on the 5 year route to a 10 year route is unlawful and unfair

    Paul McCarthy

    Quick Reads

  • Aline Wey Speirs writes for The Global Legal Post on the mediation process in Switzerland

    Aline Wey Speirs

    In the Press

  • World Intellectual Property Review quotes Olivia Gray on the post-Brexit treatment of design rights

    Olivia Gray

    In the Press

  • UK Immigration Reform – deeper restrictions on the horizon

    Paul McCarthy

    Quick Reads

  • The Court of Arbitration for Sport Appeals Procedure

    Benoît Pasquier

    Insights

  • Caroline Greenwell and Bella Henry write for Law 360 on the Santander fraud ruling and what it means for the UK banking sector

    Caroline Greenwell

    In the Press

  • Mastering Claims Against Estates: A Guide to Debt Enforcement in Switzerland

    Remo Wagner

    Quick Reads

  • Caroline Greenwell, Abigail Rushton and Bella Henry write for Solicitors Journal on the latest Business Plan from the Serious Fraud Office

    Caroline Greenwell

    In the Press

  • The QFC Court of Appeal Rules that the QFC is not an ‘Opt-In’ Jurisdiction

    Christopher O'Brien

    Insights

  • Tamasin Perkins and Lydia Kember write for Charity Finance on the collapse of Kids Company

    Tamasin Perkins

    In the Press

  • Singapore High Court Clarifies Status of Interim Measures in Arbitration

    Peter Brabant

    Quick Reads

  • Insolvency Administration Orders – Applications by Personal Representatives

    Daniel Moore

    Insights

  • Charles Russell Speechlys International Promotions 2025

    Bart Peerless

    News

  • Anti-Bribery & Corruption United Arab Emirates

    Sara Sheffield

    Insights

  • Computing quotes Gareth Mills on a major antitrust case involving Google

    Gareth Mills

    In the Press

  • Thomas Snider, Dalal Alhouti and Robin Hayden write for New Law Journal on International Arbitration trends and what practitioners should watch for in 2025

    Thomas R. Snider

    In the Press

  • Setting Standards: The Ciarb Guideline on AI Use in Arbitration

    Dalal Alhouti

    Insights

Back to top