Following the recent judgment of the Court of Justice of the European Union (CJEU) in joined cases, C-37/20 and C-601/20 issued on 22 November 2022, the Department of Registrar of Companies and Intellectual Property has announced the suspension of access to the Register of Beneficial Owners for the public.
The CJEU held that Article 1, point 15(c) of Directive (EU) 2018/843 of the European Parliament and the Council, of 30th May 2018 (the 5th AML directive AML Directive), whereby Member States must ensure that the information on the beneficial ownership of corporate and other legal entities incorporated within their territory is accessible in all cases to any member of the public, is invalid. 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 and it is illegal as being disproportionate and contrary to the rights of privacy and protection of personal data under Articles 7 and 8 of the Charter of Fundamental Rights of the European Union.
The Court noted that the interference entailed by that measure is neither limited to what is strictly necessary nor proportionate to the objective pursued. In addition to the fact that the provisions at issue allow for data to be made available to the public which is not sufficiently defined and identifiable, the regime introduced by the 5th AML directive amounts to considerably more serious interference with the fundamental rights guaranteed in Articles 7 and 8 of the Charter than the former regime (which provided, as well as access by the competent authorities and certain entities, for access by any person or organisation capable of demonstrating a legitimate interest), without that increased interference being capable of being offset by any benefits which might result from the new regime as compared against the former regime, in terms of combating money laundering and terrorist financing.
In particular, the fact that it may be difficult to provide a detailed definition of the circumstances and conditions under which such a legitimate interest exists, relied upon by the Commission, is no reason for the EU legislature to provide for the public to access the information in question. The Court adds that the optional provisions which allow Member States to make information on beneficial ownership available on the condition of online registration and to provide, in exceptional circumstances, for an exemption from access to that information by the general public, respectively, are not, in themselves, capable of demonstrating either a proper balance between the objective of general interest pursued and the fundamental rights enshrined in Articles 7 and 8 of the Charter, or the existence of sufficient safeguards enabling data subjects to protect their personal data effectively against the risks of abuse.
The suspension becomes effective on the 23rd of November 2022.
The relevant information to the competent and supervisory authorities and the Unit as referred to in article 12 of Directive R.A.A. 112/2021 and amending Directive R.A.A. 116/2022, will continue to be provided with the applicable procedure. The relevant information will also continue to be provided to the obliged entities, with the applicable procedure by submitting additionally a solemn declaration confirming that the information on the Beneficial Owners is requested within the context of performing customer due diligence.
Back in March 2021, the Registrar of Companies established the Ultimate Beneficial Owner Register for corporate and other legal entities to strengthen the framework for the prevention of money laundering and terrorist financing activities. All Cyprus companies were obliged to comply with the relevant legislative framework and submit the details of UBO(s) by the 31st of July 2022.
It should be noted that the obligation of companies and partnerships to submit and update their Beneficial Owners information is not affected and remains valid.
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