Public Access to Company Register to Be Restricted Again

Earlier this year, to comply with the EU anti-money laundering Directive V, the Commercial Register of Estonia along with other EU countries made all the information of legal entities accessible to the public, including the personal data of companies’ shareholders and beneficiary owners.

Court ruling to restrict access to personal data of beneficiaries

However, the said provision of the Directive which required full public access to beneficial ownership information was ruled invalid by the Court of Justice of the European Union (CJEU) on 22 November 2022. EU member states are obliged to comply with the court ruling, meaning that their company registers will have to restrict access to the data in question.

In Estonia however, no official position has been formed yet on what legal procedures are to be taken to comply with the Court’s decision. The corresponding Estonian law is still in force and the information of the beneficiaries is still publicly accessible.

Yet there is no penalty in Estonia for submitting false information to the Commercial Register, either by accident or on purpose. Therefore, the real beneficiary owners of a company can be hidden in any case if they do not want their names to be publicly accessible.

So, while Estonian authorities are still in deep thought, managers of Estonian companies may refrain from providing data on their beneficiary owners, justifying it with the fact that it violates their fundamental rights. At the end of the day, Estonia will have no other choice but to bring its legislation in line with the Court’s ruling.

The shift in anti-money laundering regulation?

This case has also shown that some of the anti-money laundering provisions have no legal basis and even constitute an infringement of the fundamental rights protected by the EU Charter of Fundamental Rights that may result in the invalidation of such provisions.

The European Court also stated that the provision regarding public access to the personal data of companies’ beneficiaries had actually no sense as there were no benefits or positive effects of making UBO data accessible in terms of combating money laundering and terrorist financing. May it be the case in this respect that some other encumbering provisions will be cancelled in the future to make it easier for entrepreneurs to run their businesses?

Many business owners, for instance, have been suffering from the arbitrariness of banks when opening and maintaining bank accounts. It looks like not every bank knows how to fully comply with so complicated and often even vague anti-money laundering regulations, making it even harder for real businesses to concentrate on what really matters.

So, what next? Will anti-money laundering regulations be simplified? Or will the noose continue to tighten?