The question of whether public registers of beneficial ownership are compatible with individuals' fundamental rights to privacy and data protection is currently before the Court of Justice of the European Union.
The history
In 2013, the 'G8' (i.e. the G7 plus Russia), agreed a roadmap on 'open economies, open societies and open governments', which included an open charter of government data, and which lauded central registers of beneficial ownership.
At around the same time, Edward Snowden revealed the systematic collection of metadata of millions for the US Nationality Security Agency. This indirectly culminated in the adoption of the CRS in 2014, the GDPR in 2016, the Investigatory Powers Act 2016, and the OECD's Automatic Exchange of Information, extending the principle of the US' FATCA.
Meanwhile, publicly accessible registers of beneficial ownership became a reality in the EU and the UK (with its PSC register) in 2016, and are on their way to the Crown Dependencies, the UK Overseas Territories, Canada and New Zealand. The US introduced a (non-public) central beneficial ownership register in 2021.
The issue
In Europe, the right to privacy is currently enshrined in the European Convention on Human Rights and the EU's Charter of Fundamental Rights.
The public nature of beneficial ownership registers represents the negation of these rights, and the automatic transfer of personal and financial data signifies, at the very least, a limitation. In the wrong hands, such information can be dangerous; made more dangerous in times of conflict. The EU's data protection experts have on several occasions warned that public registers put people at risk.
The right to privacy and data protection is of course not absolute. For example, public authorities can process personal data where there is sufficient legal basis and a valid public objective (such as the fight against terrorism and money laundering). In such a case however, any limitation to the fundamental rights needs to be proportionate.
The legal actions
We represent a number of clients in litigation against the excessive nature of FATCA, the CRS, and beneficial ownership registers. The EU's Advocate General has already issued his opinion and a judgment is expected in the coming months, as discussed here.
In Canada, a FATCA-related appeal was heard in March. While those cases are at an advanced stage, the jury is still out. The next 12 months will be decisive.
Further information on the data protection work by Mishcon de Reya is available here.