The Court of Justice of the European Union has ruled in favor of Italian authorities in their effort to increase transparency around fiduciary trust arrangements, marking a significant development in European anti-money laundering enforcement.
The decision, which addressed two joined cases, centered on Italy’s classification of fiduciary arrangements, known locally as “mandato fiduciario,” under European anti-money laundering regulations. These arrangements allow one party to hold and manage assets on behalf of another, potentially concealing the true ownership of assets.
Several Italian fiduciary companies had challenged the disclosure requirements, arguing that these arrangements differ fundamentally from Anglo-American trusts because ownership of assets does not formally change hands. The companies contended that forcing them to reveal beneficial ownership information violated privacy rights and created legal uncertainty.
The court rejected these arguments, determining that formal transfer of ownership is not a mandatory condition for an arrangement to be classified as a trust under European law. The judges emphasized what they termed an “effet de voile” or veil effect, where fiduciary companies can effectively screen the identity of actual asset owners.
This concealment capability is precisely what European anti-money laundering rules aim to address, according to the court’s reasoning. The regulations require member states to maintain registers identifying beneficial owners behind trusts and similar arrangements, forming part of a broader transparency initiative to trace hidden money flows.
The fiduciary firms also challenged provisions allowing individuals with a “legitimate interest” to access beneficial ownership information, arguing the concept was too vague and could lead to excessive disclosure of sensitive financial data. While dismissing this argument, the court stressed that privacy protections remain important, noting that derogations from personal data protection must apply only as strictly necessary.
The Italian system limits access to those who can demonstrate a real and specific legal interest in obtaining the information, rather than permitting unrestricted public browsing of financial data. The court approved Italy’s process of having local chambers of commerce handle initial access requests, while preserving the right to challenge disclosure decisions in court.
Giulia Cantalupi, policy officer for illicit financial flows at Transparency International EU, praised the ruling as sending an important signal while European Union countries implement new anti-money laundering reforms. She emphasized the importance of journalists, civil society organizations, and academics having access to beneficial ownership information to uncover corruption scandals and tax evasion.
The judgment comes at a crucial time as member states work to implement new transparency obligations under the bloc’s sixth anti-money laundering directive. Andres Knobel, a lawyer and consultant with Tax Justice Network, suggested the court’s broad interpretation of ownership and control could make it more difficult for individuals to distance themselves from trusts to avoid scrutiny from tax authorities, creditors, or sanctions.
Michele Riccardi, deputy director of Transcrime and an associate professor at Università Cattolica del Sacro Cuore, described the ruling as having crucial importance for the future, potentially opening or closing doors to future claims by other interest groups. He noted that meaningful transparency extends beyond beneficial ownership registers to include access to company registries, land records, and other sources that trace ownership structures.
The court framed transparency as a central tool in combating financial crime, noting that European lawmakers believed fighting money laundering required creating an environment hostile to criminals and that stronger transparency rules could serve as a powerful deterrent.
The cases will now return to Italy’s Council of State, which must apply the European court’s interpretation to the underlying disputes. As the ruling came through the bloc’s preliminary ruling system, the Luxembourg court’s judgment is final and cannot be appealed.
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