Determining the true owner of a company might become more difficult after Europe’s top court ruled automatic access to registers of beneficial ownership conflicted with the right to privacy.

In a Nov. 22 decision, the Court of Justice of the European Union (CJEU) invalidated a provision of the 5th EU Anti-Money Laundering Directive (AMLD5) that guaranteed public access to information on companies’ real owners.

The case was sent to the CJEU from a Luxembourg court after a Luxembourgish company and a beneficial owner wanted to restrict public access to the Luxembourg Business Registers, which maintains company details.

The Luxembourg court wanted clarity on whether the provisions of the AMLD5 conflicted with the European Union’s Charter of Fundamental Rights, which sets out privacy and other freedoms afforded to EU citizens.

The CJEU found the general public’s access to information on beneficial ownership constituted a “serious interference” with the fundamental rights to respect for private life and the protection of personal data. It said the AMLD5 meant access to information was “not limited to what is strictly necessary nor proportionate to the objective pursued.”

Under the AMLD4, which was superseded in 2018, registers of beneficial ownership were only accessible to members of the public who could show a “legitimate interest” in requesting the details.

In its decision, the CJEU said just because the concept of what constitutes a “legitimate interest” is difficult to spell out in detail, it should not be the case that it enables any member of the public an automatic right to access information.

Following the decision, EU member states have started blocking access to their registers of beneficial owners.

“At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.”

Maíra Martini, Corrupt Money Flows Expert, Transparency International

“Access to beneficial ownership data is vital to identifying—and stopping—corruption and dirty money,” said Maíra Martini, corrupt money flows expert at anti-corruption campaign group Transparency International, in a statement. “The more people who are able to access such information, the more opportunity to connect the dots.

“We have seen time and time again, from the Czech Republic and Denmark to Turkmenistan, how public access to registers helps uncover shady dealings. At a time when the need to track down dirty money is so plainly apparent, the court’s decision takes us back years.”

Nigel Brown, partner at law firm Gateley, called the decision an “unwelcome surprise” that sets the European Union apart from the United Kingdom and makes it more difficult for lawyers, accountants, and compliance professionals to ensure they are following different legal interpretations.

“The U.K.’s second Economic Crime Bill, for example, seeks greater transparency by requiring information on corporate entities and their owners to be made public, thus enabling both regulators and law enforcement agencies to obtain and share information on entities that may be involved in money laundering activities,” he said. “The CJEU is unhelpful given the U.K.’s current direction.”

Ted Datta, head of financial crime compliance practice, Europe and Africa, at risk specialist Moody’s Analytics, said the “disappointing” ruling will have wide-ranging ramifications for AML regulations across the European Union.

“Over recent years, significant progress has been achieved in democratizing access to information through transparency initiatives, which has made the never-ending fight against dirty money much more effective,” said Datta. “Those seeking to identify ultimate beneficial owners and take on criminal financial activity will now face more hurdles and feel disheartened.”