European Union

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Vanessa Aichstill

On 7 May 2025, the European Free Trade Association (EFTA) Court delivered its highly anticipated ruling in Joined Cases E-1/24 TC and E-7/24 AA, offering crucial guidance on the interpretation of European Economic Area (EEA) rules on access to beneficial ownership information. The questions arose: how should this provision, originally part of the Fourth Anti-Money Laundering Directive (Directive 2015/849, AMLD IV) and now incorporated into the EEA Agreement, be interpreted under EEA law, especially considering that the CJEU had declared it invalid for breaching fundamental rights and considering that the AMLD V revision process remained stalled?

The EFTA Court, which has no jurisdiction to declare EEA provisions invalid, was now tasked with providing advisory opinions in two cases:

• In Case E-7/24 AA, the request was denied on the ground that the applicant was not typically involved in anti-money laundering efforts and thus lacked a legitimate interest.
• In Case E-1/24 TC, access was refused because the applicant named only the alleged beneficial owners, without identifying the specific legal entities concerned.

This judgment marks a significant development in the evolving relationship between fundamental rights and transparency in EEA law and raises important questions about judicial dialogue, legal coherence, and the limits of the competence of the EFTA Court.

Setting the Scene: C-37/20 and C-601/20 Luxembourg Business Registers

The AMLV IV adopted in 2015, marked a significant step in the EU’s effort to enhance financial transparency and combat the misuse of corporate structures. A key feature was the introduction of public access to registers of beneficial ownership allowing anyone to identify the natural persons ultimately owning or controlling legal entities. The aim was to strengthen the fight against money laundering, terrorist financing, and financial crime by increasing corporate transparency and accountability across the internal market.

The cases centred on the interpretation of Article 30(5)(c) of AMLD IV, which allowed access to beneficial ownership information for any person or organisation demonstrating a “legitimate interest”. In its judgment in C-37/20 and C-601/20 Luxembourg Business Registers, the CJEU held that this amendment infringed upon the fundamental rights to respect for private life and the protection of personal data, enshrined in Articles 7 and 8 of the Charter of Fundamental Rights (CFR), and therefore declared it invalid. Consequently, this provision was amended by the Fifth Anti-Money Laundering Directive (Directive 2018/843, AMLD V), which significantly broadened access by granting any member of the general public the right to obtain such information.

Right of Access to Beneficial Ownership Information Legitimate interest

The first questions answered by the EFTA court concerned the notion of “legitimate interest,” which is not legally defined in this context. While it generally refers to a lawful or justified interest, its meaning in the AML framework must be interpreted in light of the directive’s transparency objective. The substantiation of a legitimate interest is both a necessary and sufficient condition for accessing information in the beneficial ownership register. EEA States may further specify this concept in national law and even introduce legal presumptions, in line with the principle of national procedural autonomy. They may also adopt or maintain stricter rules, including broader access rights for other purposes, provided these comply with EEA law, the GDPR, and fundamental rights. Accordingly, the Court held that persons whose sole link to money laundering or predicate offences is the harm suffered to their financial interests may have a legitimate interest under Article 30(5)(c) AMLD IV but are subject to a case-by-case assessment.

While such access may interfere with fundamental rights, that interference can be justified if it is appropriate, necessary, and proportionate. Proper application of national rules implementing Article 30(5)(c) AMLD IV, particularly regarding the notion of legitimate interest and evidentiary standards, helps safeguard this balance. Accordingly, the Court found that access to beneficial ownership information constitutes a proportionate interference with fundamental rights, provided the applicant can demonstrate a legitimate interest.

Identification of specific legal entities

While AMLD IV sets out the requirement to demonstrate a legitimate interest as the sole substantive condition, EEA States retain procedural discretion under the principle of national procedural autonomy (see recital 42 of the AMLD V), subject to compliance with the principles of effectiveness and equivalence. However, such procedural rules must not make access to information excessively difficult. Importantly, a legitimate interest may exist even where the applicant cannot name the legal entity, especially in cases involving investigative journalism or concealed ownership structures. Requiring such identification as an absolute condition could undermine the directive’s purpose and fundamental rights. Therefore, once a legitimate interest is demonstrated, access cannot be denied solely due to the applicant’s inability to identify the relevant entity.

Finally, the Court confirms again that the AML framework does not, as such, prevent EEA States from granting broader access for other legitimate purposes, provided that data protection rules are respected. Importantly, it emphasises that access to beneficial ownership information is not merely a matter of balancing privacy rights against public interest in combating financial crime, but must also be viewed through the lens of the right to information as part of the freedom of expression (see Tandberg).

Protection of Fundamental Rights

The Liechtenstein Government argued that the request was inadmissible, as AMLD IV had not yet entered into force in the EEA at the time. The Court recalled that under Article 98 EEA Agreement, incorporation and repeal of acts require a Joint Committee decision, and that Article 102 EEA Agreement obliges the Committee to safeguard legal certainty and homogeneity. Citing the second recital and Article 1(1) EEA Agreement, the Court emphasized the special relationship between the EU and EFTA States and the goal of extending the internal market across the EEA. It also noted that a gap between the two EEA pillars has existed since 1992 and has widened over time. This gap refers to the growing backlog in incorporating EU legal acts into the EEA Agreement, which delays their application in the EEA EFTA States and challenges the principle of homogeneity that underpins the internal market.

One of the major developments in EU law is the adoption of the CFR, which, along with its case law, is also relevant for interpreting EEA law. While the EEA Agreement does not contain an explicit fundamental rights provision, its first recital affirms shared commitments to peace, democracy, and human rights. The EFTA Court has consistently held that fundamental rights form part of the general principles of EEA law and must guide its interpretation. National courts are therefore obliged to interpret and apply EEA law in a manner consistent with fundamental rights. In doing so, the Court draws on common constitutional traditions and international human rights instruments, particularly the ECHR, to which all EEA States are parties. The ECHR and ECtHR case law are key reference points, and pursuant to Article 52(3) CFR, rights under the Charter have the same scope as their ECHR counterparts, though EU law may offer higher protection. Articles 7 and 8 CFR, which protect private life and personal data, mirror and reinforce the safeguards found in Article 8(1) ECHR. As such, there are no compelling grounds under EEA law to consider that the level of fundamental rights protection diverges from that under EU law. The Court invokes fundamental rights to justify interpreting the provision as it stood before the contested amendment, effectively setting aside its legal effects within the EEA context.

Conclusion

The judgment marks a significant development for the EEA legal order. While the issue of divergent validity between EU and EEA provisions previously arose in cases such as Schrems (C-362/14) and Test-Achats (C-236/09), timely action by the EEA Joint Committee ensured that invalidated EU provisions were removed or amended within the EEA framework. This is the first time the EFTA Court has directly addressed such a mismatch, setting an important precedent, especially in the fundamental rights context.

Critically, the judgment also reflects the pragmatic nature of the relationship between the EU and EEA legal orders, shaped by the structural backlog in incorporating EU law into the EEA Agreement. As the Court acknowledged (para 51), the temporal and legal gaps between the two pillars have continued to widen. Against that backdrop, the ruling demonstrates a flexible, case-by-case approach to safeguarding the homogeneity of the EEA while recognising the practical constraints of legal alignment in real time.

 

This article is based on discussions that took place during the workshop organised at the Salzburg Centre of European Union Studies on 15-16 May 2025 as part of EUCHALLENGES, a Jean Monnet Centre of Excellence co-funded by the European Commission under grant agreement no. 101127539.

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Vanessa Aichstill is a PhD Candidate/Research and Teaching Assistant at the Salzburg Centre of European Union Studies, University of Salzburg.

The post Between Two Pillars: Validity Gaps and Legal Reality in the EEA appeared first on Ideas on Europe.

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