Europe Financial Transparency and Privacy
Balancing Financial Transparency and Privacy Rights in the European Union
The European Union's efforts to increase financial transparency by creating registers of real ownerships have been met with legal challenges that question the balance between transparency and privacy. This article will examine the recent decision by the Court of Justice of the European Union (CJEU) to annul the public access to the Luxembourg Register of Real Ownerships, and its implications for financial transparency in the EU.
Background
In 2018, the European Council mandated that member states create registers of real ownerships to increase transparency in financial transactions and prevent money laundering. However, the CJEU recently declared that public access to the register in Luxembourg violated the Charter of Fundamental Rights of the European Union that protects privacy and personal data. The ruling has led other countries to restrict access to their registers, including Austria, Belgium, Germany, Malta, and the Netherlands.
Transparency vs. Privacy
The decision by the CJEU has sparked debate on the balance between financial transparency and privacy rights. Proponents of transparency argue that public access to registers of real ownerships can prevent illegal investments and money laundering by revealing who the true owners of companies are. On the other hand, privacy advocates contend that public access to such registers infringes on individual privacy rights.
Inconsistent Registers
The lack of uniformity among registers of real ownerships across EU member states has also contributed to the controversy. While some countries like Denmark, Estonia, and Latvia have created publicly accessible databases, others restrict access, require payment for data, or limit access to residents. Such inconsistencies make it difficult to achieve a global register of real ownerships, a goal advocated by some economists.
Implications for Financial Transactions
The legal challenge to the Luxembourg Register of Real Ownerships has raised questions about the impact on financial transactions in the EU. Some experts argue that the lack of transparency in the real estate sector can lead to illegal investments and inflated prices, while others claim that public access to registers can inhibit legitimate business transactions.
Conclusion
The conflict between financial transparency and privacy rights in the EU underscores the need for a balanced approach to prevent money laundering and illegal investments while safeguarding personal data. EU member states must work towards creating uniform and consistent registers of real ownerships that comply with privacy laws and promote transparency.