On October 21, 2016 the French Cour Constitutionnel ruled that the public registry, in which data from certain trusts with ties to France are recorded, is in conflict with the French Constitution, and in particular with Article 2 of the Déclaration des droits de l’homme et du citoyen dating from 1789. A US resident of France had initiated the proceedings because she believed that the publication of her personal data in the public registry compromised her privacy to an unacceptable degree. For this reason, the Court ruling declares the registry unconstitutional; it is no longer publicly accessible.
The French trust registry
The French trust registry was introduced as part of the Lutte contra la fraude fiscale et la grande délinquance économique et financière, pursuant to French legislation from December 6, 2013, in order to combat tax fraud and serious economic and financial crime. The French trust registry includes, for example, information about the ultimate beneficial owner (UBO) of a trust. The trust registry was introduced to counter tax evasion and money laundering using trusts. Although the pursuit of this goal, according to the French Court, is in principle in line with the French Constitution and can justify the invasion of the privacy of citizens, the invasion of this right to privacy by the trust registry should not go beyond what is necessary to achieve this goal. Because the registry provides public information about how a person has structured his or her assets, and the French legislator has insufficiently substantiated the way in which the unlimited public nature of the registry contributes to the realization of the registry’s goal, there is an unlawful and disproportionate invasion of the right to privacy.
Consequences for the Dutch UBO registry
The judgment by the French Constitutional Court does not relate to the UBO registry that all EU Member States must implement by virtue of the fourth European Anti-Money Laundering Directive. Furthermore, the French judgment obviously has no legal force in the Netherlands. Nevertheless, this judgment fosters the idea that a publicly accessible UBO registry is also not necessarily consistent with Dutch law. The Dutch Supreme Court is not permitted to review legislation against the Constitution and thus cannot rule on a possible invasion of the right to privacy, as established in Article 10 of the Constitution, by a public UBO registry. This right is, however, also protected by Article 8 of the European Convention on Human Rights and Articles 7 and 8 of the Charter of Fundamental Rights of the European Union. Compliance with these provisions is subject to judicial review.
The Dutch bill to implement the UBO registry is expected shortly. Earlier this year, the Ministry of Finance announced that the Dutch UBO registry will be publicly accessible. The recent French judgment emphasizes that the Dutch government will have to firmly underpin the option of giving access to the UBO registry to persons who have no legitimate interest in doing so. Without such substantiation, it does not necessarily appear that such a public registry is permissible. In addition, the question arises whether the Netherlands should want to introduce a public UBO registry, if in a country like France a similar registry with such a public character is deemed to violate the fundamental rights of French citizens. We therefore expect that those who endeavor to protect the privacy of the UBOs of Dutch entities will definitely raise the issue of the recent French ruling during the online consultation on the Dutch bill. We will keep you informed of latest developments.