Legal uncertainty surrounding the registration of beneficial owners: Courts say state cannot fine companies for failing to provide data

According to a new ruling by the Supreme Administrative Court (judgment of 1 August 2025, ref. no. 5 As 1/2025–65), the state cannot fine companies for failing to ensure that data are entered into the Ultimate Beneficial Ownership Register (UBOR) in accordance with the UBO Act. It considers such a procedure to be incompatible with EU law, since the imposition of the fine constitutes an interference with the rights to the protection of privacy and personal data, which are guaranteed by Articles 7 and 8 of the EU Charter of Fundamental Rights. The Supreme Court reached the same conclusion (resolution of 25 August 2025, file no. 27 Cdo 1368/2024), stating that a situation where no data are entered in the UBOR cannot be considered an inconsistency.

The courts thus endorsed the judgment of the Court of Justice of the European Union of 22 November 2022, in the case of WM v. Sovim SA. That judgment repealed part of the so-called AML Directive, i.e., the Directive on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, which required the free disclosure of data from the UBOR to the public. According to the CJEU, such a requirement is a disproportionate interference with the fundamental rights of owners. In response to the judgment, some Member States began to close their registers or restrict access, but the Czech Republic has not taken any action.

The Czech legislature thus faces a difficult task: either to choose an amendment that will bring the obligations into line with the requirements of EU case law, or to risk that key provisions of the law will not be enforceable. As regards a pan-European solution, a new package of legal regulations (known as the AML VI Directive) was adopted in May last year, which regulates more specifically the restrictions on access to data in the UBOR. However, Member States are required to transpose this directive by 10 July 2027, which seems like a very long delay for the legal uncertainty associated with the current legislation. If, for example, beneficial owners were to assert their constitutional rights and demand the deletion of their data from the register of beneficial owners, the question arises as to what impact this would have on entities subject to anti-money laundering regulations, which are legally obliged to handle this information.

Another contentious issue now is what will happen to the other sanction mechanisms contained in the UBO Act—in particular, the prohibition on paying out a share of profits to persons who cannot be identified as the actual owners, and the suspension of voting rights if the actual owner is not registered. These penalties are secondary consequences of violating the obligation to register the beneficial owner. But if, according to the SAC and the Supreme Court, the failure to register itself cannot be considered an unlawful act because it would constitute the enforcement of an unconstitutional obligation, it seems logical to us that these sanctioning consequences cannot be applied either.

We can only watch with anticipation how Czech lawmakers will respond to these challenges. Until then, practitioners will need to cope operatively.