The government has asked the Chamber of Commerce (CoC) not to provide information from the UBO register for the time being. The body says it will follow the government's instruction until told otherwise. Sigrid Kaag, the finance minister, will meet with all stakeholders in the coming days to discuss the implications of the European Court ruling.
So writes Minister Kaag, also on behalf of Minister of Justice and Security Dilan Yeşilgöz-Zegerius and Minister of Economic Affairs and Climate Micky Adriaansens, in a letter to the House of Representatives (1).
'UBO' is an abbreviation for Ultimate Beneficials Owners. The UBO register is a European database that lists who owns a foundation or company, and who has control or an interest in the organization in question. The purpose of the register is to prevent and detect criminal activities, such as money laundering, financing of terrorist groups and other forms of fraud.
Some of the data from the UBO register is public to Dutch and European authorities. This includes first and last name, date of birth, nationality and the size of the economic interest of the UBO. The idea is that free access to this data will act as a deterrent to criminals.
A Luxembourg court decided to refer a number of preliminary questions to the European Court of Justice on the interpretation of the Anti-Money Laundering Directive, from which the creation of the UBO register arose. A partnership sought to prevent its organization's data from being publicly accessible. The court ruled in favor of the partner, on the grounds that disclosure of its data could entail "a disproportionate risk." It would violate his fundamental rights.
The European Court of Justice finds that the Luxembourg court's ruling is correct. "The Court notes that access by the general public to information about the beneficial owners constitutes a serious interference with the fundamental rights to respect for private life and protection of personal data, which are enshrined respectively in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union," the Court's ruling reads (2)
Because information from the UBO register is accessible to anyone, it is possible to get a picture of the material and financial situation of the beneficial owner. There are also no measures that prevent personal data from being freely distributed and stored. This is a serious violation of respect for private life and protection of personal data.
"However, the Court finds that the interference resulting from this measure is not limited to what is strictly necessary and is not proportionate to the objective pursued," the Court ruled.
While the Court's ruling is addressed to the European Commission, it does have implications for EU member states as well. Minister of Finance Sigrid Kaag writes in a letter to the House of Representatives that the Court's ruling gives cause to scrutinize the provision of information on UBOs. "In that light, I have asked the Chamber of Commerce to temporarily stop providing information from the register as of today."
In our country, the UBO register is managed by the Chamber of Commerce. The latter has promised Minister Kaag to carry out her request until further decision-making. The ministeress promises to study the ruling in the coming days and consult with European Commission on what information can be released.
Minister Kaag emphasizes that the decision not to provide information from the UBO register for the time being has consequences. "For the time being, not providing any more information releases means, for example, for detection purposes, that although information is less easily consulted, the necessary information is still available on the basis of a request from the Public Prosecutor [prosecutor, ed.]. The ruling may also have financial implications, since the management of the registry is paid for by fees for consultations."
Finally, the finance minister stressed that the Court's ruling does not affect the duty of organizations to register UBOs.
Privacy First Foundation says in a statement that the court has "drawn a fat line" through the public accessibility of the UBO register (3). "For the Netherlands, this means that the UBO register may no longer be publicly accessible with immediate effect. Privacy First calls on the Minister of Finance to put this right as soon as possible. The Chamber of Commerce should be able to take care of this with one push of a button," said Privacy First Foundation lawyer Otto Volgenant of Boekx Advocaten. If this is not heeded, Privacy First will start summary proceedings, the foundation writes on Twitter.
The Privacy First Foundation filed a lawsuit last year to stop the UBO registry. The foundation lost that case, as did its appeal. Both the judge and the court ruled that it was "not plausible" that the UBO register would cause great harm to associates. The European Court thinks otherwise.
https://www.tweedekamer.nl/kamerstukken/brieven_regering/detail?id=2022Z22820&did=2022D49311
https://curia.europa.eu/jcms/upload/docs/application/pdf/2022-11/cp220188nl.pdf
https://privacyfirst.nl/rechtszaken-1/item/1240-gerechtshof-ubos-kunnen-zelf-om-afscherming-vragen.html
