One Year On From CJEU Ruling Vs Public Registers Of Beneficial Ownership

Tom Burroughes Group Editor London 29 November 2023

One Year On From CJEU Ruling Vs Public Registers Of Beneficial Ownership

An organisation working in the field of compliance and regulation argues that last year's European court ruling against public registers of beneficial ownership was a serious blow to being able to onboard people swiftly and efficiently. However, debate remains about the correct boundaries between transparency and privacy.

A year ago, a top European court angered pro-transparency campaigners and pleased privacy advocates by ruling against the idea of a public register of beneficial ownership. It was an example of how the tension between privacy and transparency remains a tough issue to resolve.

Subsequently, in March last year, there were moves by members of the European Parliament to ensure that persons with legitimate interest, such as journalists, reporters, any other media, civil society organisations, and higher education institutions, “should be able to access the register, including the interconnected central registers.” (This publication has commented on this matter.)

A problem with the Court of Justice of the European Union’s (CJEU) ruling was that it added to the inefficiency and costs for people wrestling with compliance tasks, Ted Datta, senior director and head of financial crime compliance practice for Europe, Africa, and the Americas at Moody’s Analytics, told this publication. He attacked the CJEU's ruling last year.

“For banks it was not viable to have 26 different portals for national beneficial ownership data,” he said, referring to the number of nations in the EU (post-Brexit).

“This isn’t scalable,” Datta continued. 

Moody’s is working with industry groups to examine how to manage BO data more efficiently and in ways that ensure efficiency without compromising legitimate privacy, he said. 

One consequence of the court’s ruling and related events is that the time taken to on-board people to a bank or other financial institutions is not getting shorter, Datta said.

Not everyone agrees with this argument. One individual in the legal industry, speaking on background, told this publication that legal processes aren’t meant to make life easy and efficient, but to prevent miscarriages of justice and unwarranted loss of privacy. For example, the absence of facial recognition, identity cards and a national DNA database makes it harder for the police to find criminals. 

The debate isn’t going away. In the US, the federal government is introducing the Corporate Transparency Act, imposing beneficial ownership disclosure obligations on companies (but significantly, there isn’t a public register; this information resides with state agencies). 

Over the past two decades, governments, via organisations such as the Organisation for Economic Co-operation and Development, have sought to tighten controls to stamp out tax evasion and money laundering. A concern has been that in their zeal for change, important principles concerning privacy and due process of law are being forgotten. On a more practical level, the case for public registers of beneficial ownership as a way to thwart wrongdoers has been criticised as ineffective.

Give us the tools to do the job
As far as Datta is concerned, he thinks that agencies such as Moody’s Analytics should be able to obtain information from registers. 

“We are advocating for firms such as ours to be admitted to access,” Datta said. This would equate to an extension of what banks do. “Give us the tools and we will do the job.”

This publication asked Datta about the controversy over the Panama Papers and dumping a mass of data about people, and some of the pushback it caused. Datta said he was not sure if that episode still resonated with policymakers.

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