Ln November 22, the European Union’s Court of Justice reversed a decade of progress in the fight against financial secrecy, to the delight of oligarchs and tax evaders around the world. In a flawed decision rooted in human rights, the court struck down a provision that allowed all citizens access to information about companies’ beneficial owners – the natural persons who own or control them. Europe’s big tax havens, from Ireland to the Netherlands, have already rushed to anonymize their company registers.
The Court justified its decision as follows: By making public the identity of beneficial owners of companies, we seriously infringe the respect for private life and the protection of personal data, two fundamental rights guaranteed by the Charter of the European Union (EU). So, does this decision represent a victory for human rights, a victory hailed by NGOs and the public at large? Quite the opposite.
There is no good reason to allow a person to conceal the legal entities he owns and the financial activities he conducts. For example, markets do not function well when there are invisible monopolies or conflicts of political interest, or when some of their actors benefit from fraudulent tax practices. For states, they are ineffective if they cannot guarantee fair laws, prevent criminal money laundering, and collect tax revenues that allow them to provide public services that are fundamental to human rights to all their citizens.
Only aristocrats, crooks and criminals should applaud this decision. Lawyers, trustees and other professionals describe themselves “International Tax Planning Specialists”of “Legal Advisors to High Net Worth and High Net Worth Individuals” or experts “Private Wealth and Taxation”. In short, a whole small world that helps the rich and criminals, including aristocrats under siege, to evade the laws that apply to everyone else.
Lawyers seem to have convinced the court by arguing that the risk of these rich people being kidnapped during a trip, like hackers introducing themselves to a system, works in theory. Thus, based on A A theoretical risk unfounded by any evidence, the court struck down a key transparency tool that had largely demonstrated its effectiveness. The tool made it possible to trace the assets of Russian oligarchs under embargo and uncover several money-laundering schemes.
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