Legal challenge over publication of beneficial ownership information in Luxembourg
The claim, brought by a client of law firm Mishcon de Reya, relates to beneficial ownership of companies. Following adoption of the EU Fourth Anti-Money Laundering Directive (4AMLD) in 2017, Luxembourg law now requires all businesses to identify their ultimate beneficial owners and supply the information to the LBR, which then routinely publishes it on the Register of Beneficial Owners of Companies (RBE). The client complied with this process, requesting LBR not to make the information public, but the LBR rejected her request.
Her claim, filed with the district court in Luxembourg, alleges that the ‘indiscriminate and generalised’ publication of personal details of individuals connected to family enterprises breaches their fundamental rights to data protection and privacy, and exposes them to 'unnecessary and disproportionate' risks.
Luxembourg's Law 7216B, enacted on 1 July 2020, creates a national register of fiducies and trusts, transposing 4AMLD, as well as some provisions of the Fifth Anti-Money Laundering Directive (5AMLD), into national law. Beneficial ownership information must be maintained by all domestic or foreign fiduciary arrangements and express trusts whose fiduciaire or trustee is established or domiciled in Luxembourg, or where a non-resident fiduciary agent or trustee forms a professional relationship with a Luxembourg business entity or acquires real property in Luxembourg.
The claim is the first of its kind in Europe, although similar challenges have been made to automatic information exchange between tax administrations under the OECD's Common Reporting Standard (CRS) and the US' Foreign Account Tax Compliance Act. The challenges have been made partly on privacy grounds and partly because of inadequate security, demonstrated by a cyberattack penetration of the Bulgarian National Revenue Agency in July 2019 that compromised large amounts of taxpayers' data collected via CRS.
The original intention of 4AMLD was to allow limited public access to beneficial ownership information, with company ownership information to be made available only to those who could demonstrate a 'legitimate interest' in it, and no access to information about private trusts or foundations. However, the adoption of the 5AMLD in 2018 made the details of beneficial owners of companies fully public. All EU Member States were required to implement 5AMLD by 10 January 2020 and some have now done so.
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