Public access to the Irish Register of Beneficial Ownership of
Companies ("RBO") has been suspended.
The suspension follows a landmark ruling in
which the Court of Justice of the European Union
("CJEU") found that public registers
containing the personal details of 'beneficial owners' of
companies infringe the fundamental privacy and data protection
rights of citizens.
The CJEU ruled that provisions in the 5th EU
Anti-Money Laundering ("AML") Directive
requiring Member States to ensure that the information on the
beneficial ownership of corporate and other legal entities
incorporated within their territories is accessible in all cases to
the general public is invalid. The CJEU ruling marks an important
moment in the wider transparency v privacy debate.
Case Background
The decision stemmed from two disputes concerning the
Luxembourgish registry's refusal to restrict public access to
certain information on its register.This ultimately led to the
Luxembourgish court making a referral to the CJEU for a preliminary
ruling on those elements of the 5th EU AML Directive
legislating for almost unrestricted access to beneficial ownership
information. Its predecessor, the 4th EU AML Directive,
granted access only to public authorities and to those who could
demonstrate a 'legitimate interest' in the fight against
money laundering and terrorist financing.
In its decision, the CJEU:
- ruled that general access to personal information constituted a
serious interference with the fundamental rights to respect for
private life and to the protection of personal data enshrined in
Articles 7 and 8, respectively, of the EU Charter of Fundamental
Rights;
- observed that the information disclosed enables a potentially
unlimited number of persons to identify the material and financial
situation of a beneficial owner, and may lead to abuse of their
personal data;
- acknowledged the legitimate goal of the EU legislature in
seeking to prevent money laundering and terrorist financing by
creating an environment less likely to be used for those purposes;
and
- found, nonetheless, that the interference with individuals'
fundamental rights was disproportionate and extended beyond what
was strictly necessary to achieve to the objective of the
measures.
In response, and in line with similar action taken across the
EU, the Registrar of Beneficial Ownership of Companies halted the
search facility of the Irish Beneficial Ownership Register. Work is
now underway on restricting access to "Designated
Persons" only.
Policy Context
The beneficial ownership regime attempts to increase
transparency regarding ownership and control of companies and other
legal structures. Complex corporate or trust arrangements can
obscure the transparency of ownership. The evolving legislative
regime had a number of important milestones:
- In April 2016, the UK introduced a version of a beneficial
ownership regime (known as the 'PSC' regime) for UK
companies and partnerships.
- In November 2016, the EU followed suit with its own beneficial
ownership regime and, on the basis of this, Ireland
introduced measures requiring companies to take steps to
identify their underlying beneficial owners. Up to this point, the
identity of the beneficial owners of Irish companies could remain
largely private.
- In 2019,
an enhanced EU disclosure regime was introduced, mandating
public filings by companies with the newly established RBO.
- In April 2021, trusts became the subject of a new
disclosure regime.
- In March 2022, Irish companies with UK property interests
became obliged to comply with the
Register of Overseas Entity regime.
Wider Implications of the CJEU's Ruling
Legislators must now examine the ramifications of the principles
underlying the CJEU judgment, for example, to other types of
corporate disclosures or to systems of automatic exchange of tax
and other information. We can expect prolonged policy analysis and
debate on this topic over the coming years.
For Now?
In the meantime, Matheson advises corporates and other in-scope
entities to continue, as normal, to:
- comply with the obligation to gather information;
- establish and maintain an internal beneficial ownership register; and
- file their beneficial ownership details in the RBO.
All these elements of the regime remain in force. We will keep
you informed of any updates or developments in this area. If you
have any questions about this issue, please get in touch with your
usual Matheson contact.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.