EU ruling casts doubt on Jersey launching public ownership register

Friday 25 November 2022

A new European court ruling has cast doubt on whether Jersey will still be able to launch a public register showing the true ‘beneficial owners’ of companies.

In a recent judgment following a case in Luxembourg, the European Court of Justice – which makes sure EU law is applied fairly across Member States - concluded that the general public’s access to information on the underlying owners of a company or trust constitutes “a serious interference” with their fundamental rights to privacy and the protection of personal data. 

It added: “Indeed, the information disclosed enables a potentially unlimited number of persons to find out about the material and financial situation of a beneficial owner. 

“Furthermore, the potential consequences for the data subjects resulting from possible abuse of their personal data are exacerbated by the fact that, once those data have been made available to the general public, they can not only be freely consulted, but also retained and disseminated.”

Jersey established a register of beneficial owners in January 2021. However, details are held by the Jersey Financial Services Commission and will not be made public until the EU has agreed disclosure standards.

The CJEU ruling casts doubt on whether that will happen. 

External Relations Minister Philip Ozouf said: “We are carefully considering the detail of the EU Court of Justice’s ruling as part of the development of Jersey’s policy regarding beneficial ownership. 

“The Government of Jersey intends to publish a policy statement and action plan on beneficial ownership transparency in the near future.”

Pictured: Jersey's register of beneficial ownership is held at the Jersey Financial Services Commission and is not open to the public.

The EU court was passing judgment on the legality of an anti-money laundering directive issued in 2015 by the EU Commission, specifically a provision whereby the information on the beneficial ownership of companies incorporated within the territory of a Member States is accessible in all cases to any member of the general public. 

It judged that that provision was invalid.

Calling it a “seminal” judgment by the court, UK-based Filippo Noseda, a partner of law firm Noseda of Mishcon de Reya, said: “Today’s judgment represents a victory for data protection and the rule of law in an extremely politicised context.

“Our research shows that the European Commission believed that providing indiscriminate access to sensitive personal information on the ownership of companies to the public at large in the age of the GDPR was disproportionate and unacceptable. 

“However, the Commission went along with proponents of public registers to assuage the demands of NGOs following the publication of the Paradise Papers at the end of 2017. 

“Nobody should engage in money laundering or terrorism financing. However, the fight against crime must be conducted respecting the fundamental rights of compliant citizens. 

“Nobody would condone search and entry powers without judicial scrutiny. In this country and abroad, there is a healthy debate in relation to the data protection implications of privacy-invading technologies deployed by e-commerce platforms, employers, the police or the intelligence community. 

“However, when it comes to beneficial ownership of companies and bank accounts, high-profile public campaigns run by highly organised and single-minded transparency campaigners has succeeded in stymying the debate about ends and means, and the principle of proportionality, which is at the core of the Rule of Law. 

“Today’s judgment confirms that transparency campaigners were wrong in pursuing a single-minded approach and that public society needs a balanced debate over issues that raise data protection implications.”   

Mr Nodesa added that judgment was likely to have practical implications beyond the EU, including the UK. 

“The UK was the first country to introduce public registers of beneficial ownership of UK companies and partnerships in 2016, which was followed by public registers of overseas entities holding UK land in March 2022,” he said.

“By the same token, the UK continues to adhere to the GDPR principles and therefore the EU judgment will be watched closely in the UK.”