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Fall out continues from beneficial ownership ruling

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The pendulum is swinging: Michael Hanson, managing partner at Carey Olsen Bermuda

The European Union is still mulling this month’s landmark ruling by the European Court of Justice that EU law does not permit beneficial ownership information to be freely available to the public.

The Financial Mail On Sunday called it “a major blow to press freedom, transparency and the fight against fraud”.

The publication details how the ruling puts the EU on a collision course with the United Kingdom, because of UK efforts to make ownership records available in all British jurisdictions, in its fight against fraud and money laundering.

Michael Hanson of the law firm, Carey Olsen Bermuda is quoted: “The pendulum finally appears to be swinging back towards privacy and security.”

The court struck down the EU order for public registers of corporate beneficial ownership, ruling they infringed upon fundamental rights of privacy and personal data protection.

The report outlines how lawyers are now saying that Bermuda, and other offshore financial centres, have to again restrict access, following the court ruling.

Filippo Noseda at Mishcon de Reya, a law firm acting for claimants in the ECJ case said: “There is a real possibility that the UK registers are in contravention of UK law [as that law is derived from the EU].”

The pressure group Tax Justice Network immediately urged the EU to fight against the ruling, “to not accept a return to the dark ages of dirty money”.

But Ireland has just joined other EU countries, the Netherlands, Luxembourg and Austria, in blocking public access to company records.

In response to questioning from The Royal Gazette last week, a Bermuda finance ministry spokeswoman said: “The Ministry of Finance has taken note of the ruling and will continue to monitor developments in this regard.

“Consistent with our reputation as a premier international financial centre, Bermuda remains committed to transparency, compliance with international standards and co-operation.”

Guernsey, Jersey and the Isle of Man had pledged to open registers by the end of next year, but said they were now considering the ruling.

Two unidentified owners of companies registered in Luxembourg had brought the case to the ECJ after objecting to personal details being made available in public documents.

The court found that the public's access to information on beneficial ownership constitutes a serious interference with the fundamental rights to respect for private life and to the protection of personal data.

The ruling came after at EU urging, the UK had previously pledged to tackle the use of shell companies for financial crime and terrorism using a number of measures, the most controversial of which was subjecting their ownership to more public scrutiny.

UK Labour MP Dame Margaret Hodge, who chairs a cross-party Anti-Corruption Committee, said the ruling was “a terrible blow” and “utterly out of touch” with a consensus that transparency was the best antidote to “dodgy“ corporate behaviour. She added: ”Citizens have a right to know the identity of those who own firms or hold property in the UK.“

Right to know: Dame Margaret Eve Hodge, DBE and Labour Pary MP for Barking since 1994. Lady Hodge chairs the cross-party Anti-corruption Committee. (Photograph supplied)

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Published November 28, 2022 at 7:22 am (Updated November 28, 2022 at 7:22 am)

Fall out continues from beneficial ownership ruling

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