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MALTATODAY 27 November 2022

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12 NEWS maltatoday | SUNDAY • 27 NOVEMBER 2022 For collection from MaltaToday offices, order online at EU Court rolls back beneficial ownership rules MATTHEW VELLA A transparency rule to give the public access to the beneficial ownership of companies has been ruled to be invalid by the European Court of Justice. The Court said the access to the BO register for compa- nies whose ultimate beneficial owners were hidden by trusts or nominees, was an interfer- ence that was "neither limited to what is strictly necessary nor proportionate to the objective pursued." Malta operates a BO registry that gives access to undisclosed UBOs at the rate of €5 for each company. The 2019 anti-secrecy regula- tions were enacted by EU coun- tries in recent years as a direct response to the financial impro- prieties disclosed by the Pana- ma Papers, the Pandora Papers, and other similar leaks of finan- cial data. The case concerns the Lux- embourgish business register, which like other registries can restrict access to such infor- mation in cases when UBOs re- quest it not to be public. In two cases, a company and its bene- ficial owner had unsuccessfully requested LBR to restrict the general public's access to infor- mation concerning them. The matter was referred to the ECJ, requesting a ruling on how to interpret the EU's anti-money laundering directive and its pro- visions in the light of the Char- ter of Fundamental Rights of the European Union. The Court ruled that the gen- eral public's access to informa- tion on beneficial ownership constituted a serious inter- ference with the fundamental rights to respect for private life and to the protection of person- al data. "Indeed, the information dis- closed enables a potentially un- limited number of persons to find out about the material and financial situation of a benefi- cial owner," the ECJ said. "Furthermore, the potential consequences for the data sub- jects resulting from possible abuse of their personal data are exacerbated by the fact that, once those data have been made available to the general pub- lic, they can not only be freely consulted, but also retained and disseminated." The rules are intended at pre- venting money laundering and terrorist financing by creating, by means of increased transpar- ency, an environment less likely to be used for those purposes. But the ECJ now believes that interference is disproportion- ate, while not resulting in any benefits in terms of combating money laundering and terrorist financing. Under current regu- lations, the court claimed, dis- closing such information allows a potentially endless number of people to learn about a benefi- cial owner's material and finan- cial status. Tax equity and transparency activists argue that "beneficial ownership" the wealthy, but al- so criminals and tax cheats to disguise ownership of entities they use to hide their wealth from authorities. "By requiring corporations and offshore entities to publicly disclose who truly owns them, public beneficial ownership laws are designed to prevent their owners from escaping the rule of law, which can mean preventing billionaires from evading tax as well as prevent- ing sanctioned oligarchs, organ- ized crime and human traffick- ers from laundering money and financing illegal activity," said the London-based Tax Justice Network advocacy group. Tax Justice Network also said the ruling occurred in the midst of EU deliberations about strengthening measures to fight dirty money entering the EU from Russia. "With public ac- cess to registers across the EU now revoked, dirty money will likely surge back into the EU," the organisation warned. The global anti-graft watch- dog Transparency Internation- al also believes that the EU Court of Justice's ruling has set back the battle against cross-border corruption for years. "We have seen time and time again, from the Czech Republic and Denmark to Turkmenistan, how public access to registers helps uncover shady dealings. At a time when the need to track down dirty money is so plainly apparent, the court's decision takes us back years," Maíra Martini, corrupt money flows expert at Transparency International, told OCCRP (Or- ganised Crime and Corruption Reporting Project). Roland Papp, senior policy officer of Transparency Inter- national EU, thinks European lawmaking and executive bod- ies can counter the Court's deci- sion by "guaranteeing access in the current 6th EU Anti-Money Laundering Directive," which should also include "precise provisions that reconcile public access with privacy and security concerns." The Court ruled that the general public's access to information on beneficial ownership constituted a serious interference with the fundamental rights to respect for private life and to the protection of personal data.

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