The debate rages on
Abstract
- Public registers of the beneficial owners of companies started in the UK. The EU followed suit under the Fourth Anti-Money Laundering Directive (4AMLD), which introduced the obligation for all EU Member States to create a register of the ultimate beneficial owners (UBOs) of their corporate entities. 4AMLD should have come into force in June 2017 but, in the meantime, the Fifth Anti-Money Laundering Directive was published and made a number of amendments to the original text, a significant amendment of which was art.30(5), which regulates access to the UBO registers.
- It was this very amendment that was recently declared to be invalid by the European Court of Justice (ECJ) in its decision of 22 November 2022 in the joined cases C-37/20 and C-601/20, the latter of which was based on a complaint by a Luxembourg company called Sovim and led to the decision being sometimes referred to as the ‘Sovim decision’. The two cases considered by the ECJ illustrate the tension between transparency, which is served by public access to the UBO registers, and the fundamental right to privacy.
- This article will analyse the Sovim case and review the consequences of the decision both in the EU and the UK.
Public registers of the beneficial owners of companies started in the UK. The Small Business Enterprise and Employment Act 2015 (SBEEA), which was granted Royal Assent on 26 March 2015, provided for the creation of a public register of ‘persons with significant control’ (PSC) over UK corporate entities (the PSC Register) in 2016.
The EU followed suit under the Fourth Anti-Money Laundering Directive (4AMLD),[1] which introduced the obligation for all EU Member States to create a register of the ultimate beneficial owners (UBOs) of their corporate entities. Originally, such registers would not be accessible to the general public but only to:
- the competent authorities in charge of the fight against money laundering;
- ‘obliged entities’ (i.e., banks and other professionals subject to anti-money laundering (AML) obligations) for the purposes of corporate due diligence; and
- people and organisations who could demonstrate a legitimate interest.
4AMLD should have come into force in June 2017 but, in the meantime, the Fifth Anti-Money Laundering Directive (5AMLD)[2] was published and made a number of amendments to the original text. A significant amendment was art.30(5), which regulates access to the UBO registers in the following way:
‘Member States shall ensure that the information on the beneficial ownership is accessible in all cases:
Please login to access this content
If you are not a member, find out more about joining STEP or subscribing to STEP articles.