Joined Cases C‑37/20 and C‑601/20
WM (C‑37/20) and Sovim SA (C‑601/20)
v
Luxembourg Business Registers
(Two requests for a preliminary ruling from the Tribunal d’arrondissement de Luxembourg (Luxembourg District Court, Luxembourg))
Judgment of the Court (Grand Chamber), 22 November 2022
(Reference for a preliminary ruling – Prevention of the use of the financial system for the purposes of money laundering or terrorist financing – Directive (EU) 2018/843 amending Directive (EU) 2015/849 – Amendment to Article 30(5), first subparagraph, point (c), of Directive 2015/849 – Access for any member of the general public to the information on beneficial ownership – Validity – Articles 7 and 8 of the Charter of Fundamental Rights of the European Union – Respect for private and family life – Protection of personal data)
1. Approximation of laws – Prevention of the use of the financial system for the purposes of money laundering and terrorist financing – Directive 2015/849 – Amendment requiring Member States to ensure that any member of the general public has access to information on the beneficial ownership of companies and of other legal entities incorporated within their territory – Serious interference with the rights to respect for private life and to the protection of personal data – Justification – Observance of the principle of legality and respect for the essence of the fundamental rights – Existence of the objective of general interest – The interference in question not necessary and proportionate – Invalidity
(Charter of Fundamental Rights of the European Union, Arts 7 and 8; European Parliament and Council Directives 2015/849, Art. 30(1),(5) and (9), and 2018/843, recitals 30 and 31, and Art. 1(15)(c))
(see paragraphs 37-44, 47-52, 57-59, 66, 67, 71-76, 81-85, 88 and operative part)
2. Fundamental rights – Respect for private life – Protection of personal data – Limitations – Conditions
(Charter of Fundamental Rights of the European Union, Arts 7, 8 and 52(1))
(see paragraphs 46, 63-65)
3. Approximation of laws – Prevention of the use of the financial system for the purposes of money laundering and terrorist financing – Directive 2015/849 – Amendment requiring Member States to ensure that any member of the general public has access to information on the beneficial ownership of companies and of other legal entities incorporated within their territory – Serious interference with the rights to respect for private life and to the protection of personal data – Justification – Reliance upon the principle of transparency as an objective of general interest capable of justifying the interference in question – Not permissible
(Arts 1 and 10 TEU; Art. 15 TFEU; European Parliament and Council Directive 2015/849, as amended by Directive 2018/843, Art. 30(5), first subparagraph, point (c))
(see paragraphs 60-62)
Résumé
For the purposes of combating and preventing money laundering and terrorist financing, the anti-money-laundering directive (1) requires Member States to keep a register containing information on the beneficial ownership (2) of companies and of other legal entities incorporated within their territory. Following an amendment of that directive by Directive 2018/843, (3) some of that information must be made accessible in all cases to any member of the general public. In accordance with the anti-money-laundering directive as thus amended (‘the amended anti-money-laundering directive’), Luxembourg legislation (4) established a Register of Beneficial Ownership (RBO) designed to retain and make available a series of information on the beneficial ownership of registered entities, access to which is open to any person.
In that context, the tribunal d’arrondissement de Luxembourg (Luxembourg District Court) was seised of two actions, brought by WM and Sovim SA, respectively, challenging the rejection by Luxembourg Business Registers, the administrator of the RBO, of their applications seeking to preclude the general public’s access to information relating, in the first case, to WM as the beneficial owner of a real estate company and, in the second case, to the beneficial owner of Sovim SA. In those two cases, since it had doubts in particular as to the validity of the provisions of EU law establishing the system of public access to information relating to beneficial ownership, the Tribunal d’arrondissement de Luxembourg (Luxembourg District Court) made a reference to the Court of Justice for a preliminary ruling on validity.
By its judgment, the Court, sitting as the Grand Chamber, declares Directive 2018/843 invalid in so far as it amended the anti-money-laundering directive in such a way that Member States must ensure that information on the beneficial ownership of companies and of other legal entities incorporated within their territory is accessible in all cases to any member of the general public. (5)
Findings of the Court
In the first place, the Court finds that the general public’s access to information on beneficial ownership, provided for in the amended anti-money-laundering directive, constitutes 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 of the Charter of Fundamental Rights of the European Union (‘the Charter’) respectively.
In that regard, the Court observes that, since the data concerned include information on identified individuals, namely the beneficial owners of companies and other legal entities incorporated within the Member States’ territory, the access of any member of the general public to those data affects the fundamental right to respect for private life. In addition, making available those data to the general public constitutes the processing of personal data. It adds that making personal data available to the general public in that manner constitutes an interference with the abovementioned fundamental rights, whatever the subsequent use of the information communicated. (6)
As regards the seriousness of that interference, the Court notes that, in so far as the information made available to the general public relates to the identity of the beneficial owner as well as to the nature and extent of the beneficial interest held in corporate or other legal entities, that information is capable of enabling a profile to be drawn up concerning certain personal identifying data, the state of the person’s wealth and the economic sectors, countries and specific undertakings in which he or she has invested. In addition, that information becomes accessible to a potentially unlimited number of persons, with the result that such processing of personal data is liable to enable that information to be freely accessed also by persons who, for reasons unrelated to the objective pursued by that measure, seek to find out about, inter alia, the material and financial situation of a beneficial owner. That possibility is all the easier when the data in question can be consulted on the internet. Furthermore, the potential consequences for the data subjects resulting from possible abuse of their data are exacerbated by the fact that, once those data have been made available to the general public, they can not only be freely consulted, but also retained and disseminated and that it thereby becomes increasingly difficult, or even illusory, for those data subjects to defend themselves effectively against abuse.
In the second place, as part of the examination of the justification for the interference at issue, first, the Court notes that, in the present case, the principle of legality is respected. The limitation on the exercise of the abovementioned fundamental rights, resulting from the general public’s access to information on beneficial ownership, is provided for by a legislative act, namely the amended anti-money-laundering directive. In addition, that directive specifies that those data must be adequate, accurate and current, and expressly lists certain data to which the public must be allowed access. It also lays down the conditions under which Member States may provide for exemptions from such access.
Secondly, the Court clarifies that the interference in question does not undermine the essence of the fundamental rights guaranteed in Articles 7 and 8 of the Charter. While it is true that the amended anti-money-laundering directive does not contain an exhaustive list of the data which any member of the general public must be permitted to access, and that Member States are entitled to provide for access to additional information, the fact remains that only adequate information on beneficial owners and beneficial interests held may be obtained, held and, therefore, potentially made accessible to the public, which excludes, inter alia, information which is not adequately related to the purposes of the amended anti-money-laundering directive. As it is, it does not appear that making available to the general public information which is so related would in any way undermine the essence of the fundamental rights referred to.
Thirdly, the Court points out that, by providing for the general public’s access to information on beneficial ownership, the EU legislature seeks to prevent money laundering and terrorist financing by creating, by means of increased transparency, an environment less likely to be used for those purposes, which constitutes an objective of general interest that is capable of justifying even serious interferences with the fundamental rights enshrined in Articles 7 and 8 of the Charter.
Fourthly, in the context of the examination of whether the interference at issue is appropriate, necessary and proportionate, the Court holds that, admittedly, the general public’s access to information on beneficial ownership is appropriate for contributing to the attainment of that objective.
However, it finds that that interference cannot be considered to be limited to what is strictly necessary. First, the strict necessity of that interference cannot be demonstrated by relying on the fact that the criterion of the ‘legitimate interest’ – which, according to the anti-money-laundering directive, in the version prior to its amendment by Directive 2018/843, any person wishing to access information on beneficial ownership had to have – was difficult to apply and that its application could give rise to arbitrary decisions. The fact that it may be difficult to provide a detailed definition of the circumstances and conditions under which the public may access information on beneficial ownership is no reason for the EU legislature to provide for the general public to access that information.
Secondly, nor can the explanations set out in Directive 2018/843 establish that the interference at issue is strictly necessary. (7) To the extent that, according to those explanations, the general public’s access to beneficial ownership information is intended to allow greater scrutiny of information by civil society, in particular by the press and civil society organisations, the Court finds that both the press and civil society organisations that are connected with the prevention and combating of money laundering and terrorist financing have a legitimate interest in accessing the information concerned. The same is true of the persons who wish to know the identity of the beneficial owners of a company or other legal entity because they are likely to enter into transactions with them, or of the financial institutions and authorities involved in combating offences of money laundering or terrorist financing.
Nor, moreover, is the interference in question proportionate. In that regard, the Court finds that the substantive rules governing that interference do not meet the requirement of clarity and precision. The amended anti-money-laundering directive provides that any member of the general public may have access to ‘at least’ the data referred to therein, and provides that Member States may provide for access to additional information, including ‘at least’ the date of birth or the contact details of the beneficial owner concerned. However, by using the expression ‘at least’, that directive allows for data to be made available to the public which are not sufficiently defined and identifiable.
Furthermore, as regards the balancing of the seriousness of that interference against the importance of the objective of general interest referred to, the Court recognises that, in view of its importance that objective is capable of justifying even serious interferences with the fundamental rights enshrined in Articles 7 and 8 of the Charter.
Nevertheless, first, combating money laundering and terrorist financing is as a priority a matter for the public authorities and for entities such as credit or financial institutions which, by reason of their activities, are subject to specific obligations in that regard. For that reason, the amended anti-money-laundering directive provides that information on beneficial ownership must be accessible, in all cases, to competent authorities and Financial Intelligence Units, without any restriction, as well as to obliged entities, within the framework of customer due diligence. (8)
Secondly, in comparison with the former regime – which provided, in addition to access by the competent authorities and certain entities, for access by any person or organisation capable of demonstrating a legitimate interest – the regime introduced by Directive 2018/843 amounts to a considerably more serious interference with the fundamental rights guaranteed in Articles 7 and 8 of the Charter, without that increased interference being capable of being offset by any benefits which might result from the latter regime as compared against the former regime, in terms of combating money laundering and terrorist financing.