Harmonisation of the beneficial ownership registers in European Union

Purpose The requirement for Member States to maintain National Central Registers is a part of a broader strategy aimed at ensuring economic security for citizens and businesses operating within the European Union (EU) by combating financial crime. Unfortunately, in terms of the definition of beneficial owner and the maintenance of National Central Registers, the regulatory landscape has for several years been plagued by a critical lack of harmonisation. Although two EU Directives, 2015/849 and 2018/843, have come into force in national law, individual Member States have been using different criteria regarding the term beneficial owner. The purpose of this paper is to analyse the functioning of the beneficial ownership registers in the EU and to assess the reform initiated in this area by the European Commission in 2021 – both in terms of the differences that exist and the projects aimed at harmonising regulations. Design/methodology/approach To verify the issue of beneficial owners in the EU, a basic research question was formulated – what are the reasons for the lack of harmonisation in the maintenance of National Central Registers? The hypothesis adopted is that the differences in how the beneficial ownership registers function can be eliminated only when the new Anti-Money Laundering (AML) Directive 2024/1640 is correctly implemented and Regulation 2024/1624 is correctly used by Member States. Two research methods were used in this study. The primary one was an institutional-legal analysis. By verifying the directives and regulations published by EU bodies, the current model for defining and registering beneficial owners was analysed. The results obtained were compared against the ideas included in the package of legislative proposals announced in 2021. On this basis, critical comments were formulated on the directions of reforms that have been adopted. The second method was a comparative analysis of the functioning of the National Ownership Registers in all Member States – especially as concerns personal data protection. Findings The research findings revealed that ambiguity in the definition of beneficial owner has given rise to numerous problems. A large part of the data entered in the registers in EU countries is questioned by obliged entities and public institutions. The lack of harmonisation of personal data protection is also a problem. These issues reduce the value of the registers as a tool to effectively combat money laundering. This study ultimately shows that the key to harmonisation is not merely adopting the new AML Directive, but ensuring that Member States implement it correctly. Originality/value This paper discusses the important issue of regulatory requirements introduced under EU law for private sector and public institutions. This research presents a number of risks related to the proposed reforms and critical reflections on the functioning of beneficial ownership registers. In addition, to the best of the author’s knowledge, this is one of the first scholarly texts to identify and systematise the key challenges related to the registers’ functioning in EU Member States.