Pressure is mounting on the government to have the Malta Business Registry re-open its Register of Beneficial Ownership to journalists and civil society groups working on the prevention and combating of money laundering and terrorist financing.
In its agreement this week on strengthening the EU’s anti-money laundering ‘rulebook’ and on a new directive, the AMLD6, the Council of the European Union made it amply clear that “Member States should ensure that any natural or legal person that can demonstrate a legitimate interest has access to information held in the beneficial ownership registers, and such persons should include those journalists and civil society organisations that are connected with the prevention and combating of money laundering and terrorist financing.”
It is unclear what position Malta had taken at Council level after it was one of the first EU states to have jumped on the bandwagon and cut off access to its UBO register in the wake of its questionable interpretation of a European Court of Justice ruling.
But the government will now be forced to abide by the Council’s agreement, which means the MBR will be obliged to backtrack and re-open its ultimate beneficial ownership register to at least the press and certain civil society groups.
In its 22 November ruling, the ECJ cited the legal context of EU directives that stipulate, “Public access to beneficial ownership information allows greater scrutiny of information by civil society, including by the press or civil society organisations, and contributes to preserving trust in the integrity of business transactions and of the financial system.”
But in the immediate wake of the ECJ ruling invalidating access by the general public to Ultimate Beneficial Ownership (UBO) registers to the general public, some EU states immediately set about cutting off access to their registers even to journalists and interested civil society players.
Along with Malta, Luxembourg and the Netherlands – two others countries that, like Malta, are highly sensitive about their beneficial ownership registers – restricted access in what is being widely considered as a major setback in the fight for corporate transparency and against financial crime.
In its ruling, the ECJ found that access to the register by journalists and certain civil society actors “…can contribute to combating the misuse of corporate and other legal entities and legal arrangements for the purposes of money laundering or terrorist financing, both by helping investigations and through reputational effects, given that anyone who could enter into transactions is aware of the identity of the beneficial owners.”
The ECJ also said in its ruling that, “To the extent that that recital states that the general public’s access to beneficial ownership information allows greater scrutiny of information by civil society, and that express reference is made in that regard to the press and to civil society organisations, it should be found that both the press and civil society organisations that are connected with the prevention and combating of money laundering and terrorist financing have a legitimate interest in accessing the information on beneficial ownership.”
The ECJ had been asked to rule on the issue following complaints from several individuals and companies who appealed to the Luxembourg registry for their names to be kept private. The ruling names two plaintiffs – WM, the beneficial owner of Luxembourg real estate company Yo and Sovim SA, which is also registered in the country.
The Opposition has called on the government to reopen the Malta Business Registry’s register of Beneficial Owners for journalists and civil society, a day after the database was abruptly removed from the MBR’s website.
Nationalist Party shadow justice minister Karol Aquilina and shadow economy minister Ivan Bartolo had labelled the government’s decision to close the UBO register as “manifestly disproportionate and hasty”.
“The decision of the Malta Business Registry means that journalists and civil society will be deprived of an essential tool in the search for the truth and the disclosure of abuses, which are aimed at strengthening democracy and good governance,” they said.
They had called on Economy Minister Silvio Schembri “to give a clear directive to the Malta Business Registry so that, as a government agency, to immediately give free, full and open access to journalists and civil society to the registry’s information”.
They also called on Justice Minister Jonathan Attard and Schembri to table a Bill in Parliament to reflect the EJC’s ruling that will recognise, at law, the right of journalists and civil society to access the MBR’s UBO registry.