The debate over the compatibility of EU public registers of beneficial ownership with fundamental rights to privacy and data protection has peaked recently in light of comments made by the EU Advocate General, Giovanni Pitruzzella.
In the ongoing CJEU joined cases WM and Sovim SA v. Luxembourg Business Registers (C-37/20 and C-601/20), the Advocate General's Opinion seeks to suggest that beneficial ownership information is not particularly sensitive, and that public access to such information via open registers does not lead to any particularly serious interference with fundamental rights to privacy and data protection.
In the cases, two registered beneficial owners of Luxembourg companies asked to limit access to the general public to their data, because disclosure of that data would disproportionately risk infringement of their fundamental rights. They were denied such request.
The Advocate General's comments directly contradict the European Data Protection Supervisor's Opinion 1/2017, in which they warned that public access to beneficial ownership information showed “a lack of proportionality, with significant and unnecessary risks for the individual rights to privacy and data protection". This contrary opinion is also reflective of uneasy comments made by members of the European Commission and the Council of the EU at the time the GDPR was first being discussed in 2016/2017, which have come to light in a series of internal documents recently made public.
Although the CJEU could depart from the Advocate General’s opinion in making their judgment on the combined cases, his omission of evidence contrary to his opinion and the Commission’s lack of engagement with our correspondence on FATCA suggest an attempt by EU institutions to undermine the protection of compliant citizens’ fundamental rights, at least in the area of automatic exchange of information and public EU registers.
A negative outcome in the WM and Sovin case could have wide-ranging implications for the US, notably on the future of the central registers of beneficial ownership administered by the US Financial Crimes Enforcement Network introduced in 2021.
Publication of this internal EU correspondence could lead to a public debate on a balanced approach to the whole issue of transparency.
We represent a number of clients in litigation against the excessive nature of FATCA, the CRS, and beneficial ownership registers.
Find further information on the data protection work by Mishcon de Reya on our website.