The recent decision of a court in Luxembourg in November 2022 has caused quite a stir in the European Union, as it determined that the General Data Protection Regulation (GDPR) rights conflict with the publication of Ultimate Beneficial Ownership (UBO) information in transparency registers. This ruling has raised concerns about the impact it will have on transparency and Anti-Money Laundering (AML) compliance in B2B relationships in Europe.
The GDPR is a regulation that governs data protection and privacy in the EU, while the UBO information refers to the identity of individuals who ultimately own or control a legal entity, such as a company. Transparency registers were introduced as part of the EU’s efforts to combat money laundering and terrorism financing by increasing the transparency of ownership structures of companies and other legal entities.
However, the recent ruling has created a conflict between the right to privacy and the right to access information. The court stated that the publication of UBO information in transparency registers, which can be accessed by the public, could infringe on an individual’s right to privacy and data protection.
As a direct consequence of this decision, to the date at least the following transparency registers have suspended their public access, according to Transparency International: Germany, Belgium, Netherlands, Luxembourg, Ireland and Austria. We have reports of transparency registers partially restricting access to UBO personal information in other EU jurisdictions as well.
This ruling has far-reaching implications for B2B relationships in Europe, as it means that companies may be required to reassess their AML compliance policies and procedures. The lack of UBO information available in transparency registers could make it more difficult for companies to carry out due diligence on their business partners and could lead to an increased risk of money laundering and terrorism financing.
How to Tackle this Problem?
Despite the decision of the court in Luxembourg and its repercussions over data availability from transparency registers in Europe… it is business as usual, and show must go on. The withdrawal of UBO information means no exemption to comply with AML directives, so, how can you continue onboarding corporate customers or partners without proper data availability, and yet comply with AML regulations?
In SignD we got inspired by the motto “Connecting the dots in RegTech”.
By designing a workflow that “squeeze the lemon” of data availability till the last drops and complementing it with other compliant onboarding options, we can design processes in which even under restricted data scenarios, like the one we are currently undergoing, you can keep business as usual and onboard corporates in minutes and in a fully compliant way.
Exhaust all the information from transparency registers: Not all transparency registers in the EU are currently closed for consultation, and those who are still open are still delivering partial information. In order to “exhaust all possible means” for UBO identification, we recommend to consider official UBO registers as the first data source.
Further complete your corporate information requests by accessing hundreds of millions of records through private trusted data services like Dun & Bradstreet, Moody´s Analytics, among others.
For further corporate information, easily connect via API with local corporate trusted databases to nurture the quality of information in determined areas
Even with full access to every single corporate information database in the world, a 100% of coverage of UBO and other important information will never be possible. For those cases in which there is simply no data available, you can always use SignD KYB onboarding with QES.
This service consists on a guided workflow to identify and onboard online your corporate customers/partners. The process ends in the signing of a contract using legally-binding Qualified Electronic Signature from the previously identified company Director or authorized signatory. The contract is also fully customizable, and considers an self-generated sworn declaration of the Director or equivalent, in which any change (or addition) to UBO information done during the onboarding process is documented, and with the company signature, validated.
The changes or additions in UBO information are not updated into transparency registers or any other database, and when being validated with a QES by a valid representative, AML compliance requirements are considered fulfilled.