AML Update: ECJ decision impacts access to beneficial ownership information
On 22 November 2022, the European Court of Justice announced its finding that the provision of the Fourth Money Laundering Directive (MLD4) (as amended by the Fifth Money Laundering Directive (MLD5)) under which Member States must ensure “any member of the general public” can access information held on the central registers of beneficial ownership of corporates is invalid.
The Court’s finding was on the basis that such general access constituted a “serious interference” with the rights guaranteed by Articles 6 and 7 of the EU Charter on Fundamental Rights.
Under MLD4 as originally drafted, Member States had to ensure that access to those central registers was granted to competent authorities and financial intelligence units (without restriction), obliged entities (for customer due diligence purposes) and to “any person or organisation that can demonstrate a legitimate interest”. However, MLD5 later replaced that final “legitimate interest” limb with a reference to “any member of the general public” – the Commission confirmed at the hearing that this was in light of difficulties in providing a detailed definition of “legitimate interest”. It did, however, retain the “legitimate interest” concept in Article 31 of MLD4, which deals with access to information on the beneficial ownership of certain trusts.
Impact on Irish Registers
Until now, while members of the general public who access information on the beneficial ownership of Irish corporates have only been able to see a restricted sub-set of that information, they have not needed to show that there was a specific reason / legitimate interest behind their request. As that now appears to be out-of-step with the ECJ’s decision, the Central Register of Beneficial Ownership of Companies and Industrial and Provident Societies (managed by the Companies Registration Office) has suspended its search facility while it works on restricting access to it in light of the ECJ’s decision (see here).
Information on the beneficial ownership of other corporates (ICAVs and credit unions) is held on the Beneficial Ownership Register of Certain Financial Vehicles, managed by the Central Bank of Ireland (CBI). The CBI hasn’t suspended its search facility, but is asking that those requesting information from that register confirm whether they are a designated person or competent authority (see here).
We will issue further updates as developments occur.