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Europe’s highest court upends anti-corruption efforts by finding the right to anonymously own a company

WHAT ON EARTH JUST HAPPENED?

I have become accustomed to the U.S. Supreme Court putting its considerable weight on the scales to benefit the rich and powerful, but I admit I was blindsided by the European Court of Justice decision to do the same. Now admittedly Tuesday’s ruling is only available in French so far and, though I can order a croissant without too many problems, I can’t decipher legalese (and Google Translate gives us “large bedroom” for “grande chambre,” which can’t be right), so I am relying on the press release here, but I am still very alarmed.

  • “The Court, sitting as the Grand Chamber, holds that, in the light of the Charter, the provision of the anti-money-laundering 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 general public is invalid,” the court’s press release states.

For decades, efforts to expose and restrict kleptocracy, corruption and money laundering have focused on making sure everyone can easily discover who owns companies. Shell companies have been used in every major financial crime in recent times. And in March, members of the Financial Action Task Force — the intergovernmental body setting standards on money laundering regulations — agreed that every country needed to collect data on companies’ so-called “beneficial ownership.”

Admittedly, not every country is committed to publishing that information for all to see, but in 2018 the European Union insisted it would forge ahead and let everyone see what actual people stood behind corporate structures.

  • “Public access to beneficial ownership information allows greater scrutiny of information by civil society, including by the press or civil society organizations, and contributes to preserving trust in the integrity of business transactions and of the financial system. It can contribute to combating the misuse of corporate and other legal entities and legal arrangements for the purposes of money laundering or terrorist financing,” the European Commission’s resolution stated at the time.

This was welcomed by everyone with concerns about financial crime as a crucial step forward, and members of the EU have gradually started to comply with it. This has been one of the most unmitigatedly good developments for anti-money laundering of recent years, in my opinion.