Europe slides toward US-style corporate ownership rules, enabling corruption and scams
REGISTRIES
The thunderous reverberations of last week’s lightning-bolt-from-the-blue European court decision to block public access to company ownership information are getting — if anything — louder. I’ve had a bit of pushback against my interpretation in last week’s newsletter of this momentous decision, so I’m going to lead with it again, because it’s that important.
Those EU countries that had already implemented the bloc’s fifth anti-money-laundering directive, or 5AMLD, and allowed anyone to look at their corporate registries have rapidly complied with the court’s ruling.
- “Following the judgment of the Court of Justice of the European Union of 22 November 2022, access to the RBE website via the internet is temporarily suspended. A solution allowing access to the RBE data by professionals as defined in Article 2 of the amended Law of 12 November 2004 on the fight against money laundering and terrorist financing will be communicated shortly,” says the Luxembourg registry.
- “The contents of the UBO register can currently only be consulted by competent authorities such as the Public Prosecution Service. For example to investigate money laundering or the financing of terrorism,” notes its Dutch equivalent.
According to the Financial Times, the Belgian and Austrian registries are also offline and — it goes without saying — any progress in other countries towards meeting the measures laid out in 5AMLD will now be halted. Why is this a big deal? Why do I not agree with the subscribers who wrote to me last week to point out that, among other things, the viewpoint I expressed in my newsletter was "not correct," "legally dubious" and "not true"?
The entire basis of the court’s ruling is that people’s right to privacy is so important that access to company ownership information should be limited to competent authorities or to any “person or organization capable of demonstrating a legitimate interest.” That in turn is based on the assumption that the competent authorities are sufficiently resourced, motivated or empowered to care. Considering the decades-long history of those authorities being precisely the opposite of that, as demonstrated by decades of financial crimes being committed under the cover of under-investigated shell companies, this is a pretty heroic assumption to make.