Court: UBOs can request shielding themselves

The preliminary relief judge confirmed earlier that there is every reason to doubt the legality of the European money laundering directives that form the basis of the UBO register. The judge ruled that it cannot be ruled out that the highest European court, the Court of Justice of the EU, will come to the conclusion that the public nature of the UBO register is not compatible with the principle of proportionality. The ruling of the CJEU is expected in mid-2022.

Effect of the ruling

Existing legal entities do not have to register UBOs until 27 March 2022. The situation is different for new legal entities: they do have to register their UBOs immediately. The Hague Court of Appeal finds it unlikely that these UBOs will suffer serious damage in the short term. The court pointed out that a UBO who fears that he is at risk due to the disclosure of personal data can immediately shield this data from the general public. Dutch law provides for this possibility. The Hague Court of Appeal calls this "a simple way to prevent UBO data from becoming or remaining public". The UBO can apply to the Trade Register for blocking. As long as the proceedings on this are pending, the UBO data are effectively shielded. With the Hague Court of Appeal pointing out this possibility so emphatically, it is expected that many UBOs will follow this route.

Privacy First's lawyer, Otto Volgenant of Boekx Lawyers:

"The solution must come from the highest European court, the EU Court of Justice. That will rule on this in mid-2022. I expect it to draw a line under the openness of the UBO register. The Dutch UBO register is still barely filled and I advise everyone to wait as long as possible. The Dutch government has arbitrarily chosen a date for UBOs to submit their data, which is 27 March 2022. It would be wise to push that end date back a few months until after the EU Court of Justice has provided clarity. That will prevent a lot of misery and unnecessary costs."

The verdict of the summary judgment judge is here and the judgment of the Hague Court of Appeal is here.

Update 14 April 2022

Further legal action by Privacy First against the UBO register may follow in mid-2022, depending on the outcome of similar Luxembourg court cases at the EU Court. Recently, the House of Representatives determined by motion that until the EU Court's ruling, fines should not be imposed on organisations that have not yet registered their UBOs. Also, the UBO registration obligation for foundations and associations does not seem to be enforced as yet. Privacy First follows these developments closely and tries to influence these developments positively as much as possible.

Update 22 November 2022

The EU court today issued a bold line by the public accessibility of the UBO register. The general public's access to information on beneficial owners is a serious invasion of privacy. The purpose of this scheme, the fight against money laundering, does not justify this invasion of privacy. Thus the highest European court.

For the Netherlands, this means that the UBO register may no longer be publicly accessible with immediate effect. Privacy First calls on the finance minister to put that in order as soon as possible. The Chamber of Commerce should be able to take care of this at the push of a button.

Update 26 November 2022

Read here the further comments From Privacy First.