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AML & Financial Services Regulatory

Luxembourg: Unlimited access to register of beneficial owners deemed invalid

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In brief

Following the judgment of the Court of Justice of the European Union (CJEU) of 22 November 2022, access to the Luxembourg register of beneficial owners (RBO) website via the internet has been temporarily suspended. 

This judgment, taken on a preliminary ruling from the Luxembourg District Court in a dispute between the beneficial owners of an entity registered in Luxembourg and the Luxembourg Business Register (LBR), underlines that access without distinction of user quality, although imposed by the text of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing transposed into Luxembourg law, is contrary, in particular, to Articles 7 and 8 of the Charter of Fundamental Rights of the European Union (“Charter“).

The CJEU held that this access constitutes an interference with the rights guaranteed by the Charter and is not limited to what is strictly necessary and proportionate to the objective pursued.

Consequently, on 22 November 2022, the Luxembourg Ministry of Justice, in consultation with the LBR, which is responsible for managing the RBO, decided to temporarily suspend public access to the RBO via the internet portal of the LBR.

For further information on what these developments mean for your organization, please get in touch with your usual Baker McKenzie contact.

Recommended actions for professionals subject to anti-money laundering and countering the financing of terrorism (AML/CFT) obligations

How to comply with your AML/CFT obligations while the RBO is inaccessible?

  • All professionals subject to AML/CFT obligations as defined in Article two of the amended law of 12 November 2004 on the fight against money laundering and the financing of terrorism (“AML Law“) including credit institutions, professionals of the financial and insurance sectors, auditors, real estate agents, persons carrying out a family office activity, notaries, lawyers, etc., must continue to do the following:
    1. Perform their customer due diligence measures.
    2. Conduct the verification of the identity of the customer and the beneficial owner.
  • Until their access to the RBO data is reinstated, these professionals are no longer able to collect proof of registration or an excerpt of the RBO and compare their information with that of the RBO in order to detect either the existence of any erroneous data or the absence of all or part of the data, or the failure to register, modify or delete it.
  • They must continue conducting their own analyses using relevant information or data obtained from a reliable and independent source and keep records of the actions taken and any difficulties encountered during the verification process. As soon as their access to the RBO data is reinstated, they will have to collect proof of registration or RBO excerpt and compare the results of their analyses with the data appearing on the RBO.
  • Functionalities to register or modify information on the beneficial owners of the registered or to be registered entities on the RBO website remain fully available. 

In more detail

RBO access maintained for competent national authorities

  • The competent national authorities are not affected by the temporary suspension of access to the RBO and can continue to carry out the tasks incumbent upon them in the fight against money laundering and the financing of terrorism via dedicated access on the LBR intranet portal.

Next steps

  • The Ministry of Justice, the LBR and the State Information Technology Center are working on a technical and legal solution to quickly guarantee access to the RBO for the professionals referred to in Article two of the AML Law, and for the press and civil society organizations linked to the prevention and fight against money laundering and the financing of terrorism and that have a legitimate interest in accessing beneficial ownership information.
  • The European Commission is currently reviewing the judgment. The Luxembourg government has stated that it will closely liaise with the European Commission to discuss together the consequences of the judgment and the solutions that may be envisaged at the European level. 
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Author

Jean-François Findling is a founder and the managing partner of the Firm’s Luxembourg office. Prior to joining Baker McKenzie, he established his own law firm in 2009 and was a partner in a leading Luxembourg firm. Mr. Findling is regularly recommended by Legal 500 for his extensive experience in mergers and acquisitions and private equity.

Author

Laurent Fessmann is a Banking & Finance partner specializing in the formation and structuring of Luxembourg investment funds. He is a former managing partner of the Luxembourg office and the current co-chairman of the Baker McKenzie's Global Funds Steering Committee. He started his career in 1996 as in-house counsel in a French CAC40-listed company where he worked intensively on LBO transactions, capital markets and corporate law matters. Mr. Fessmann joined a Luxembourg business law firm where he became a partner prior to founding his own law firm in 2009. He is a highly regarded professional and recognized legal professional in Chambers, Legal 500, IFLR notably. He contributes time and knowledge in several market participant industry associations in particular as co-chairman of the ABBL/ALFI depositary forum working groups, the European Public Real Estate Association, the Luxembourg Private Equity Association and the Association of Global Custodians. He is also a regulator at fund conferences such as ALFI, IBCI and regularly invited to speak on internal or bank seminars.

Author

Catherine Martougin is a partner in the Funds & Asset Management team of the Baker McKenzie Luxembourg office. She has more than 20 years' experience in business law. Prior to joining the Firm, she practiced in elite international law firms in Paris and Luxembourg.

Author

Elodie Duchêne is a partner in the M&A and Corporate practice groups of Baker McKenzie's Luxembourg office and has more than 16 years of experience. Prior to joining the Firm in 2015, she worked for an independent law firm in Luxembourg for nine years.

Author

Annie Elfassi is the Partner in charge of the Litigation and Employment departments of Baker McKenzie's Luxembourg office. She has over 19 years of experience. Prior to joining the Firm in 2019, Annie Elfassi was a member of the Litigation and Risk Management practice and headed the Employment department of a leading law firm in Luxembourg.

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