(CN) – A financial deal designed to keep one person’s name out of another person’s assets ran afoul of Europe’s anti-money laundering rules on Thursday, as EU judges backed Italy’s efforts to find out who is really behind the money.
In a ruling involving two joined casesThe Court of Justice of the European Union broadly sided with Italy and EU lawmakers against several Italian fiduciary companies that argued the disclosure system violated privacy rights, created legal uncertainty and delved too deeply into private financial affairs.
Known in Italy as “mandato fiduciario”, the agreement allows one party to hold and manage assets on behalf of another. Italian authorities treated these structures as trust-like arrangements under European anti-money laundering law, meaning the firms had to disclose information about the true beneficiaries behind them.
This classification became the main complaint of the industry. The companies insisted that the arrangements worked differently from Anglo-American trusts because ownership of the assets never formally changes hands.
The judges rejected this argument. “Such a transfer of ownership cannot be considered a binding condition,” the court wrote, finding that EU law does not require assets to formally change ownership before an arrangement can be treated as a trust.
Instead, the judges focused on what they described as an “effet de voile,” or veil effect, in which fiduciary companies can function as a screen that hides the identity of the true owner. This feature, they said, is important because the EU’s anti-money laundering rules are specifically designed to expose the secretive ownership structures linked to money laundering and terrorist financing.
European law already requires member states to keep registers identifying the “beneficial owners” behind trusts and similar arrangements, part of a wider transparency step aimed at making it easier to trace hidden money flows.
Fiduciary firms separately objected to rules allowing people with a “legitimate interest” to request access to beneficial ownership information, warning that the concept was too vague and risked opening up sensitive financial data too widely.
The judges also rejected this argument, but noted that privacy protections still matter. “More specifically, derogations and limitations in the protection of personal data should be applied only to the extent that it is strictly necessary, with the understanding that, when there is a choice between several measures suitable for the fulfillment of the legitimate objectives pursued, recourse should be made to the least difficult”, wrote the court.
The decision repeatedly referred to transparency as a central tool in Europe’s fight against financial crime. The judges noted that EU lawmakers considered that the fight against money laundering “could not be effective without creating an environment hostile to criminals” and that stronger transparency rules could serve as “a powerful deterrent”.
However, the court made it clear that this was not a green light for unrestricted public access to ownership records. Under the Italian system, access is limited to people able to show a real and specific legal interest in receiving the information, rather than allowing anyone to browse sensitive financial data freely.
The judges also approved Italy’s process that allows local chambers of commerce to deal with access requests first, while retaining the ability to later challenge those disclosure decisions before a court.
The decision immediately drew attention from transparency advocates and anti-money laundering scholars who were watching how far European courts are willing to let governments go in balancing financial transparency with privacy rights.
Giulia Cantalupi, policy officer for illicit financial flows at Transparency International EU, welcomed the decision, saying it sends an important signal as EU countries work through a new round of anti-money laundering reforms and transparency obligations.
“It is essential that journalists, civil society organizations and academics are able to use beneficial ownership information to uncover corruption scandals, tax evasion and abuse by anonymous companies across Europe and beyond,” said Cantalupi.
She added that the judgment comes at a sensitive time for the EU’s latest anti-money laundering overhaul, as member states work to implement new transparency obligations under the bloc’s sixth anti-money laundering directive.
Other transparency activists said Thursday’s trust rulings could have implications beyond beneficial ownership registries, particularly for efforts to stop the use of trusts to protect assets and circumvent sanctions.
Andres Knobel, an attorney and consultant at the Tax Justice Network, said the rulings confirm longstanding concerns that “the trusts’ flexibility, ownerless oblivion and asset protection features can be abused to escape the rule of law, or in this case, sanctions.”
He added that the court’s broad reading of ownership and control could make it harder for people to distance themselves from trusts “until the coast is clear of tax authorities, creditors or sanctions.”
Michele Riccardi, deputy director of Transcrime and an associate professor at the Università Cattolica del Sacro Cuore, said the ruling “could really open or close the door to future claims from other interest groups,” calling the judgment “of crucial importance for the future.”
Riccardi also noted that the broader debate on transparency now extends beyond the beneficial ownership registers themselves.
“It is reductive to limit the concept of ‘transparency’ only to the existence and accessibility of beneficial ownership registries,” he said, adding that meaningful transparency also depends on access to company registries, land records and other sources that track ownership structures and assets.
The fiduciary firms and Italian authorities did not immediately respond to requests for comment.
The cases now go back to Italy’s Council of State, which must apply the EU court’s interpretation of the underlying disputes. Because the decision came through the bloc’s preliminary ruling system, the Luxembourg court’s decision itself is final and cannot be appealed.
Courthouse News reporter Eunseo Hong is based in the Netherlands.
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