Harmonisation of the beneficial ownership registers in European Union

Harmonisation of Beneficial Ownership Registers in the European Union: A Critical Step in Combating Financial Crime

Introduction: The Need for Uniform Beneficial Ownership Registers

The fight against money laundering and terrorist financing within the European Union has long been hampered by inconsistencies in how Member States define and maintain Beneficial Ownership Registers (BORs). Initiated under Directive (EU) 2015/849 (the Fourth Anti-Money Laundering Directive, 4AMLD), the establishment of National Central Registers (NCRs) aimed to increase transparency in business transactions and prevent the concealment of illicit financial flows. However, the uneven interpretation and application of these rules across Member States have weakened their effectiveness, calling for urgent reforms to harmonise the regulatory framework.

Challenges in Defining and Maintaining Beneficial Ownership Registers

The core challenge lies in the ambiguous definition of “beneficial owner” (BO) under the 4AMLD. While the law set a threshold of 25% ownership or control to identify a BO, variations in national interpretations allowed legal entities to exploit loopholes. Complex ownership structures, indirect control through multiple layers, and inconsistent recognition of senior managing officials as BOs led to unreliable data entries. Many obliged entities — such as financial institutions tasked with verifying BO information — struggled with legal complexities and lacked adequate diligence, thereby undermining the purpose of the registers.

Furthermore, personal data protection regulations varied significantly among Member States, complicating access rights to BO information. Some countries provided unrestricted public access, while others imposed rigorous registration, authentication, or fees. This patchwork approach reduced the utility of BORs as effective tools for financial crime prevention.

Impact of the Court of Justice of the European Union Judgment on Access to Data

In 2022, the Court of Justice of the European Union (CJEU) ruled against unrestricted public access to BO data, emphasizing that it infringed on privacy rights protected under EU law. This decision invalidated provisions from the Fifth Anti-Money Laundering Directive (5AMLD) that had granted open access and required Member States to implement a “legitimate interest” test for data access. Consequently, Member States adopted divergent policies — some restricting access severely, others maintaining more open registers — further fragmenting the landscape.

This ruling underscored the tension between transparency for AML purposes and privacy protection, creating operational challenges for regulators and stakeholders who rely on accurate BO data.

The 2024 Reforms: Towards Harmonisation with AMLR and 6AMLD

Recognizing these issues, the European Commission introduced comprehensive reforms through Regulation (EU) 2024/1624 (Anti-Money Laundering Regulation, AMLR) and Directive (EU) 2024/1640 (6AMLD). Unlike directives requiring national transposition, AMLR is directly applicable in all Member States, ensuring a uniform legal definition of BO. The new regulation refines the ownership threshold to 25% with an option to lower it to 15% for high-risk entities and expands definitions to include indirect ownership and control through various means.

The 6AMLD complements AMLR by standardizing mechanisms for maintaining BORs and regulating access to BO information. It mandates that access be granted only upon demonstration of legitimate interest but streamlines cross-border recognition of such interests. Certain categories — journalists, civil society organizations engaged in AML efforts, financial institutions — are granted easier access to facilitate oversight and accountability.

Additionally, authorities are empowered to conduct on-site verifications to ensure accuracy of BO information, addressing issues related to incorrect reporting of senior managers as BOs.

Bastian Schwind-Wagner_Follow "The European Union’s new Anti-Money Laundering Regulation and Directive mark pivotal progress toward harmonising beneficial ownership registers across Member States. Their success hinges on consistent implementation to enhance transparency while protecting personal data, crucial steps in combating financial crime effectively."

Remaining Risks and Operational Challenges

Despite these advances, critical challenges remain. Enforcement of accurate reporting requires robust supervisory mechanisms, but resource constraints may limit authorities’ capacity for comprehensive inspections. The legitimate interest test introduces bureaucratic hurdles that may deter some users from accessing BORs, potentially limiting transparency.

Moreover, allowing Member States discretion in implementation risks recreating disparities that undermine a level playing field. There is concern that overly restrictive access policies could attract illicit actors seeking opacity or create competitive imbalances within the EU market.

Effective monitoring by the European Commission will be essential to ensure consistent application of new rules and prevent backsliding.

Conclusion: Harmonised Beneficial Ownership Registers as a Pillar of EU AML Policy

The harmonisation of beneficial ownership registers is vital for preserving the EU’s reputation as a transparent and fair economic area. The reforms introduced by AMLR and 6AMLD represent a significant step forward by providing clear definitions, enhancing access controls aligned with privacy rights, and empowering authorities for better oversight.

However, the success of these reforms depends not only on legislation but on diligent implementation by Member States and cooperation among public and private actors involved in anti-money laundering efforts. Continuous oversight, capacity building, and balancing transparency with privacy will determine whether BORs can fulfill their promise as effective tools against financial crime in Europe.

Dive deeper

• Research ¦Tomasz Michał Matras; Harmonisation of the beneficial ownership registers in European Union. Journal of Money Laundering Control 2025 ¦ Link