EU ruling will restrict data about company ownership information

An EU ruling has suspended public access to company ownership databases, making simple information gathering problematic for companies

Salvador Nash, principal and head of company secretarial, KPMG Law

How do you find out who owns a company? That is a question that has become harder to answer in recent times. The Companies Registration Office (CRO) is the first port of call, the second is the Central Register of Beneficial Ownership (CRBO). A search of the CRO would identify the shareholders while the CRBO search would identify the beneficial owners, who may or may not be the shareholders.

However, public access has now been suspended, following a ruling of the EU Court of Justice that public access to beneficial information constitutes a serious interference with the right to respect for private life and protection of personal data, and that it was not proportionate to the objective of combating money laundering and terrorist financing.

Salvador Nash, principal and head of company secretarial, KPMG Law LLP, commented: “Seeking access to the CRBO now means providing evidence of a legitimate interest in the detection, prevention, or investigation of money laundering or terrorist financing offences and that the relevant entity concerned is connected with persons convicted of an offence consisting of money laundering or terrorist financing or holds assets in a high-risk third country.”

That said, there has been no change to the unrestricted access allowed to An Garda Síochána, the Revenue Commissioners and other official bodies, as well as to the restricted access granted to, say, banks when doing customer due diligence.

CRBO, which opened on July 29, 2019, provided the public with access to restricted information. The European Union’s Fifth Anti-Money Laundering Directive (AMLD5) introduced public access, not just to those with a legitimate interest. The reasoning in moving away from the legitimate interest threshold included agreeing between member states what would demonstrate a legitimate interest.

“There is no change to the obligations for companies to identify their beneficial owners, maintain an internal register and both file and provide updates to the CRBO of any change,” said Nash. “In addition, a Designated Person is still obliged to deliver a discrepancy notice to the Registrar.”

Nash highlights that the UK is not obliged to follow EU directives or adapt legislation to align with rulings of the ECJ. The beneficial information for UK corporates is available for public access at Companies House. Therefore, an Irish group, although not publicly disclosing its beneficial owners on the CRBO, will be obliged to publicly file such information for its UK subsidiaries.

“Challenges will now be faced both by those seeking access to the CRBO and by the Registrar in considering and responding to requests,” said Nash. “AMLD5 was influenced by the terrorist attacks in Paris and Brussels and the leaks from the Panama Papers. Its intention was to improve transparency in financial transactions to include public access to the identity of beneficial owners; such aims now in difficulty with the CRBO being unavailable to the public.”

Finance Minister Michael McGrath has agreed to re-examine the issue, not least because five other EU countries have taken different approaches. Future anti-money laundering directives may also attempt to address the concerns but in the interim, the question still remains – how do you find out the ownership of a company?