ECJ: Parts of the EU Anti-Money Laundering Directive are Invalid

Dec 16, 2022 Benn-Ibler Rechtsanwälte

On 22 November 2022, the European Court of Justice (ECJ) declared parts of the EU Anti-Money Laundering Directive to be invalid. The provision that information on beneficial owners of companies registered in the EU must be available to the general public was found to be invalid, the court ruled, as it represents a violation of EU fundamental rights.

Based on the EU Anti-Money Laundering Directive, in 2019 Luxembourg adopted a law establishing a so-called Register of Beneficial Ownership. The law provides that a series of information on beneficial owners is to be included and stored in the register. The general public has access to some of this information. Consequently, a number of companies brought an action before the District Court of Luxembourg requesting that the access of the general public to their data be restricted. In its ruling the court considered that disclosure of the information in question did pose a disproportionate risk of interference with the fundamental rights of the ‘beneficial owners’ concerned and referred a number of questions to the ECJ concerning the interpretation of certain provisions of the Anti-Money Laundering Directive and its validity in the light of the EU Charter of Fundamental Rights.

The ECJ was of the opinion that the provisions of the EU Anti-Money Laundering Directive in question constitute a serious interference with the right to respect for private life and the protection of personal data enshrined in Art 7 and Art 8 of the EU Charter of Fundamental Rights. As such, this information would allow a potentially unlimited number of individuals to gain knowledge of the material and financial situation of beneficial owners. Originally, the Union legislators had aimed at preventing money laundering and the financing of terrorism with these provisions. In the ECJ’s view, the lawmakers were pursuing an objective serving the common good, which, in principle, justifies even serious interventions – as in the case at hand.

Nonetheless, the interference with the rights guaranteed by the Charter is neither limited to what is strictly necessary nor is it proportionate to the objective pursued. The severe encroachment of the new regulation associated with making data publicly accessible cannot compensate for the additional severity in comparison to the previous regulation by any benefits.

ECJ, C-37/20 (22 November 2022)