Overview of the Anti-Money-Laundering EU Directive

EU Directive 2015/849 (“2015 Directive”) required each EU member state to establish a register of beneficial ownership (“RBO”) containing personal data about the owner of each legal entity in that member state – such as their name, nationality, and ownership interest – and to make the RBO publicly available. The 2015 Directive required the RBO to be made accessible to anybody who could demonstrate a “legitimate interest” in accessing the RBO.

Directive 2018/843 (“2018 Directive”) amended the 2015 Directive by allowing any member of the general public to access the RBO, regardless of whether they could demonstrate a “legitimate interest”.

As a result, this would allow “greater scrutiny by civil society, including by the press or civil society organisations, and contributes to preserving trust in the integrity of business transactions and of the financial system […] given that anyone who could enter into transactions is aware of the identity of the beneficial owners [….]. The access to that information would also help investigations on money laundering, associated predicate offences and terrorist financing.”

The Republic of Cyprus implemented the 2018 Directive into its national legal system, by amending the Prevention and Suppression of Money Laundering Activities Laws of 2017-2021 (“Law”) on 23 February 2021. According to the Law, companies and any other legal entities incorporated in the Republic of Cyprus must obtain and hold adequate, accurate, and current information on their beneficial ownership, including details of the beneficial interests held. The Law provides for the establishment of a central beneficial owner register, in accordance with the 2018 Directive.

Invalidating the amendment of the 2018 Directive: An infringement of fundamental EU rights?

Article 1(15)(c) of the 2018 Directive provides that “Member States of the European Union shall ensure that information on the beneficial ownership is accessible in all cases to: (a) competent authorities and FIUs, without any restrictions; (b) obliged entities, within the framework of customer due diligence in accordance with Chapter II; (c) any member of the general public”.

The validity of Article 1(15)(c) of the 2018 Directive was recently challenged by the Court of Justice of the European Union (“CJEU”) in the Joined Cases C-37/20 and C-601/20 (“the Judgment”) in light of Articles 7 and 8 of the Charter of Fundamental Rights of the European Union (“the EU Charter”), since the disclosure of personal information was held to be interfering with the fundamental rights to respect private life and the protection of personal data, enshrined in Articles 7 and 8 of the Charter. As a result, the CJEU declared article 1(15)(c) of the 2018 Directive 'invalid’.

A series of questions were referred to the CJEU by a Luxembourg court for a preliminary ruling on certain provisions of the Anti-Money Laundering Directive in the light of the EU Charter, following privacy challenges regarding the accessibility and disclosure of a UBO’s information in the Luxembourg Business Registers.

 Suspending public access to the RBO

The Cyprus Department of Registrar of Companies has suspended access to the RBO by the general public as of 23/11/2022.

Relevant information to competent and supervisory authorities and the Unit for Combating Money Laundering (MOKAS) will continue to be provided. The relevant information will also continue to be provided to obliged entities as defined in Article 2A of the Law, with the applicable procedure by submitting additionally a solemn declaration confirming that the information on the UBOs is requested within the context of performing customer due diligence. 

The Judgment does not affect the legal obligation of the UBO’s to submit their information in the internet platform of the Registrar of Companies.