TALLINN – The Court of Justice of the European Union on Tuesday issued a decision in the joined cases C-37/20 and C-601/20 that a provision of the EU Anti Money Laundering Directive whereby the information on the beneficial ownership of companies incorporated within the territory of the member states is accessible in all cases to any member of the general public is invalid, which may also impact the operation of public registers in Estonia.
According to the court, the general public’s access to information on beneficial ownership constitutes a serious
interference with the fundamental rights to respect for private life and to the protection of personal data enshrined in Articles 7 and 8 of the Charter, respectively. 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.
According to Lasse Lehis, member of the board of the Estonian Taxpayers' Union, it is currently difficult to assess the exact effects of this decision in the European Union and Estonia.
"Of course, this directive will also be implemented in Estonia and our law has exactly the same provision, according to which the beneficial owners' data must be published and only in very exceptional cases can a request be made to restrict disclosure," Lehis said.
He added that people who find that their fundamental rights have been violated by the disclosure of the register of beneficial owners may start to submit claims for damages, not at all against the state, but primarily against the administrators of private databases that collect and process data.
"It is one thing to simply read one line that mister X is the beneficiary of company Y, but if, by googling a person's name, we can get aggregated information on one page about the turnover, profit, taxes paid, number of employees, real estate objects and so on of all companies related to mister X with one click, then this is a different level altogether. Since the data is processed automatically, it can often be inaccurate to say the least and trusting this information can lead to economically harmful decisions," Lehis said.
"I encourage all people engaged in business to check what the whole world knows about you in our completely public superdatabases (because all the information is also available in English). At this point, it is appropriate to look at what started this dispute that reached the EU Court of Justice. The court was approached by a beneficial owner of a real estate company who claimed that they were forced to travel frequently to politically unstable countries with high levels of conventional crime, putting him at significant risk of kidnapping, illegal detention, violence or even killing. I dare say that there are enough such people in Estonia who can say exactly the same. Even if we were to believe that something like this cannot happen here in Estonia," Lehis said.
"I am personally of the opinion that the reasons given in the decision of the EU Court of Justice affect Estonia much more than the country of Luxembourg," he said, referring to the recent decision related to a Luxembourg law. "It is very likely that in Estonia we will have to start restricting not only the publication of information on the beneficial owners of legal entities, but many other information, such as the content of financial year reports or the data of the land register, must also be 'locked up'. I mean namely the publication of mass data, not the right to make individual inquiries (which also leaves a mark and the person can check who was interested in them)," Lehis added.