This post is dedicated to my good friend and ICC FraudNet fellow member, Martin Kenney, “the oracle of the BVI”.

Martin had long proclaimed that unrestricted access to beneficial ownership registries was contrary to the right to privacy and would have a counterproductive effect in terms of asset tracing and recovery.

As is well known, CJEU judgment of November 22, 2022 (Case No. C-37/2022) declared just that, proving Martin right.

The CJEU declared in such judgment the invalidity of EU Directive 2015/849, which provided that Member States had to ensure that information on UBOs had to be made available to the general public in all cases.

The CJEU considered that such provision violates Articles 7 and 8 of the EU Charter of Fundamental Rights regarding the right to privacy and the right to the protection of personal data.

The aftermath of the CJEU ruling

Obviously, the consequences of this decision have been that the authorities of the EU Member States have had to adapt to the new criteria established by the CJEU.

The Spanish authorities have done so relatively “quickly”.

The new regulation, issued just last week (Royal Law-Decree 5/2023, of 28 June) adapts Spanish law to such ruling. It ensures that only parties with due diligence obligations (according to anti-money laundering regulations) will have access to the information contained in the Ultimate Beneficial Ownership Register (“UBOR”).

They will also be able to obtain an extract from it, in order to comply with their obligations regarding the identification of the beneficial owner.

Right of access to the person with legitimate interest

In addition, all other persons or organizations that can demonstrate a legitimate interest shall have access exclusively to data consisting of:

(i) the name and surname,

(ii) month and year of birth,

(iii) country of residence and

(iv) nationality of the current UBO of a legal person or entity or structure without legal personality.

Access to the information available in the UBOR will require the prior identification of the applicant and the evidence of the legitimate interest.

But what is “legitimate interest”?

Spanish authorities have declared they will establish a list of “presumptions” of legitimate interest, but it remains to be seen whether this list will facilitate or hinder access to the UBOR.

In any case, the requirement to provide proof of the legitimate interest may certainly pose an obstacle to access.

Only experience will allow us to say whether such possible difficulties will be justified or whether, in practice, they will amount to a virtual impossibility of accessing the information.

What information will the UBOR contain?

On any case, the “future” UBOR (not yet in force, but expected to become fully operational before the Spanish general elections scheduled for July 23, 2023) will contain UBO information relating to:

• Spanish legal entities (and entities or structures without legal personality) that have the seat of their effective management or their main activity in Spain, or that are managed or administered by persons resident or established in Spain.
• Entities (or structures without legal personality) that are not managed nor registered in Spain nor another EU Member State, which intend to establish business relations, carry out occasional operations or acquire real estate in Spain.

The information will cover UBO available in public registries, such as:

• Registries of Spanish Foundations (state and regional).
• Registries of Spanish Associations (state and regional).
• Spanish Companies Register.
• Information obtained by the General Council of Notaries.
• Information and data on all legal entities, foreign “foundation-type” entities such as trusts and unincorporated entities or structures that do not declare their real ownership, which will be obliged to declare this information directly to the Register.

Sanctions will apply for the lack of declaration of the relevant information to the UBOR.