Update UBO register: Austrian authority takes public inspection off the web
01/02/2023 - Reading time: 5 minutes
As a result of the ruling of the Court of Justice of the European Union ("ECJ") in joined cases C-37/20 and C-601/20, the Austrian Federal Ministry of Finance (Bundesministerium für Finanzen - "BMF") has taken public access to the register of beneficial owners completely offline until further notice. The authority justified this step on the grounds of data protection obligations and the "repeal" of the provision in the Money Laundering Directive.
fwp has reported on the recent ECJ ruling that UBO registers no longer have to be accessible to all members of the public in all cases. According to the ECJ's ruling, the EU Anti Money Laundering Directive ("Directive") in the original case was in this respect contrary to the provisions of the General Data Protection Regulation.
The Directive requires member states to keep registers of the beneficial owners of legal persons and other entities. In order to prevent money laundering and terrorist financing, the public should thus have access to information on which natural persons are directly or indirectly the beneficial owners of a legal entity. According to the directive, this should, among other things, increase public confidence in the integrity of the financial markets.
Austria has implemented the directive with the WiEReG. In practice, legal entities report their data to the register authority, the BMF, via the Company Service Portal. In principle, anyone has access to the register of beneficial owners and can request an extract from the register electronically pursuant to Section 10 WiEReG. Pursuant to Section 10a WiEREG, access may be restricted in the case of "overriding interests worthy of protection" of the beneficial owners. This is the case in any case if the beneficial owner is a minor or legally incompetent. Furthermore, confidentiality interests worthy of protection exist if the beneficial owner may become a victim of certain criminal acts, including fraud, extortionate kidnapping or coercion.
However, the authority has now taken access to the WiEReG completely off the net:
According to an information letter dated November 24, 2022, "with the repeal of Art. 30 (5) in the version of the 5th Anti Money Laundering Directive, the basis under European law for "public inspection" pursuant to Section 10 WiEReG has also ceased to exist at the same time." In addition, it follows from the ECJ ruling that "due to the primacy of application of the Charter of Fundamental Rights of the European Union, Section 10 of the WiEReG may not be applied in its current version, which is why the prerequisites under data protection law pursuant to Art. 5 and Art. 6 of the directly applicable Basic Data Protection Regulation of the European Union have ceased to apply," according to the BMF.
Since the registry authority is obliged to protect personal data and to comply with national and European law, it took the "public inspection" application offline immediately after publication of the ruling.
Union law framework
The BMF communication reads as if the ECJ had repealed Art. 30 (5) as amended by the Directive. But is this the case? The ECJ ruled in its judgment that Art. 1 No. 15 lit c of the Directive is invalid insofar as it amended Art. 30 (...) of the Directive provides that Member States must ensure that information on the beneficial ownership of companies and of other legal entities incorporated within their territory is accessible in all cases to any member of the general public.
By way of a preliminary ruling (Art 267 TFEU), the ECJ makes a binding pronouncement on the interpretation of Union law, which has a de facto effect throughout all member states (erga omnes). If the ECJ, as here, makes a statement on the validity of a legal act of Union law, this is referred to as a validity judgment. This also has an erga omnes effect, so that there is no fundamental difference between the declaration of invalidity in a preliminary ruling and the declaration of invalidity as a result of an action for annulment (Art 263 TFEU).
Finally, the BMF also justifies its decision with the primacy of application of Union law. This is interesting because directly applicable Union law supersedes national law only to the extent that and for as long as its content contradicts Union law in a specific initial case and an interpretation of national law in conformity with Union law is not possible. The case in question took place in Luxembourg. Unlike the Luxembourg legislator, Austria has not implemented the Directive in such a way that the register of beneficial owners is accessible to all members of the public in all cases. This difference does not change the fact that the BMF, like all authorities, must observe the primacy of application over any national law and is not authorized to review acts of the Union institutions for their compatibility with the fundamental rights of national constitutions. However, to the extent that, as in Austria, there is no conflict between national law and Union law, the authorities must continue to observe and apply national law.
The communication of the Federal Ministry of Finance does not correctly reflect the content of the ECJ decision and creates a false picture of the effect of ECJ decisions on the practice of the member states. The substantive decision to completely remove access to the register of beneficial owners from the network seems excessive considering that Austria implements the Money Laundering Directive differently than Luxembourg in the initial case of the ECJ ruling. It is at least questionable whether the complete blocking of the registry is still in line with the Directive. Whether the registry authority is still acting in conformity with EU law or has overstepped the mark is a matter for discussion and will be determined by further implementation practice.