The hearing at the court of appeal in The Hague in the proceedings of Privacy First against the register for Ultimate Beneficial Owners (UBO) is scheduled for Monday, 27 September 2021.
Following the very critical advice of the European Data Protection Supervisor (EDPS), the district court of The Hague confirmed on 18 March 2021 that there is every reason to doubt the validity of the European money laundering directives that form the basis for the UBO register. The judge ruled that it cannot be excluded that the highest European court, the Court of Justice of the EU (CJEU), will conclude that the public nature of the UBO register is not in line with the principle of proportionality. Since a Luxembourg local court has already refered questions about this to the CJEU, the Dutch court in summary proceedings did not find it necessary to ask questions about it as well. Privacy First has appealed the judgment in these summary proceedings, taking the case to the court of appeal of The Hague. Our appeal summons can be found here (pdf in Dutch).
Privacy First requests the court of appeal to ask preliminary questions on the UBO register to the European Court of Justice and calls for the suspension of the operation of the UBO register until these questions have been answered. Privacy First also asks the court to temporarily suspend the public accessibility of the UBO register, at least until the CJEU has ruled on this matter. The court of appeal's ruling is expected a few weeks after the hearing on 27 September 2021.
‘‘The UBO register will put privacy-sensitive data of millions of people up for grabs’’, Privacy First’s attorney Otto Volgenant of Boekx Attorneys comments. ‘‘There are doubts from all sides whether this is an effective tool in the fight against money laundering and terrorism financing. It’s like using a sledgehammer to crack a nut. The Court of Justice of the EU will ultimately rule on this. I expect that it will annul the UBO register – at least its public accessibility. Until then, I advise UBOs not to submit any data to the UBO register. Once data have been made public, they cannot be retrieved.’’
Background of the lawsuit against the UBO register
Privacy First is bringing a lawsuit against the Dutch government regarding the UBO Register which was introduced in 2020. In summary proceedings, the invalidity of the EU regulations on which the UBO register is based are being invoked. The consequences of this new legislation are far-reaching. After all, it concerns very privacy-sensitive information. Data about the financial situation of natural persons will be out in the open. More than 1.5 million legal entities in the Netherlands that are listed in the Dutch Trade Register will have to disclose information about their ultimate beneficial owners. The UBO register is accessible to everyone, for €2.50 per retrieval. This level of public accessibility is not proportionate.
On 24 June 2020, the Dutch ‘Implementation Act on Registration of Ultimate Beneficial Owners of Companies and Other Legal Entities’ entered into force. Based on this new Act, a new UBO register linked to the Trade Register of the Netherlands Chamber of Commerce will contain information on all ultimate beneficial owners of companies and other legal entities incorporated in the Netherlands. This information must indicate the interest of the UBO, i.e. 25-50%, 50-75% or more than 75%. In any case, the UBO’s name, month and year of birth as well as nationality will be publicly available for everyone to consult, with all the privacy risks this entails.
Since 27 September 2020, newly established entities must register their UBO in the UBO Register. Existing legal entities have until March 27 2022 to register their UBOs. The law gives only very limited options for shielding information. This is only possible for persons secured by the police, for minors and for those under guardianship. The result will be that the interests of almost all UBOs will become public knowledge.
European Anti-Money Laundering Directive
This new law stems from the Fifth European Anti-Money Laundering Directive, which requires EU Member States to register and disclose to the public the personal data of UBOs. The aim of this is to combat money laundering and terrorist financing. According to the European legislator, the registration and subsequent disclosure of personal data of UBOs, including the interest that the UBO has in a company, contributes to that objective. The public nature of the register would have a deterrent effect on persons wishing to launder money or finance terrorism. But the effectiveness of a UBO register in the fight against money laundering and terrorism has never been substantiated.
Massive privacy violation and fundamental criticism
The question is whether the means does not defeat the purpose. Registering the personal data of all UBOs and making it accessible to everyone is a blanket measure of a preventive nature. 99.99% of all UBOs have nothing to do with money laundering or terrorist financing. If it was in fact proportionate to collect information on UBOs, it should be sufficient if that information is available to those government agencies involved in combating money laundering and terrorism. Making the information completely public is going too far. The European Data Protection Supervisor already ruled that this privacy violation is not proportionate. But this opinion has not led to an amendment of the European directive.
Leading up to the the debate on this law in the Dutch House of Representatives, fundamental criticism came from various quarters. The business community agitated because it feared – and now experiences – an increase in burdens and perceives privacy risks. UBOs of family-owned companies that have remained out of the public eye up until now are running major privacy and security risks. There was also a great deal of attention for the position of parties that attach great importance to the protection of data subjects, such as church communities and social organizations. As for associations and foundations that do not have owners, things are cumbersome: they have to put the data that is already in the Trade Register in another register. Unfortunately, this has not led to any changes in the regulations.
Dutch investigative journalism platform Follow the Money looked into the social costs of the Dutch UBO register. Follow the Money writes: ‘‘The UBO register entails costs, hassle and sometimes slightly absurd bureaucracy for millions of entrepreneurs and directors. The Ministry of Finance reckons the total costs of the register for the business community is 99 million Euros. Another 9 million Euros must be added for in one-time implementation costs. When lawyer Volgenant hears about this amount, he reacts with dismay: 'The total costs are much higher than I thought! If you extrapolate that to the whole EU, the costs are astronomical.’’’
Favourable outcome of lawsuit is likely
Privacy First has initiated a lawsuit against the UBO register for violation of the fundamental right to privacy and the protection of personal data. Privacy First requests the Dutch judiciary to render the UBO register inoperative in the short term and to submit preliminary questions on this subject to the Court of Justice of the European Union. It would not be the first time privacy-violating regulations are repealed by the courts, something that previous Privacy First lawsuits attest to.
The Dutch law and also the underlying European directive are in conflict with the European Charter of Fundamental Rights as well as the General Data Protection Regulation. The legislator has created these regulations, but it is up to the courts to conduct a thorough review of them. Ultimately the judge will have the final say. If the (European) legislator does not pay enough attention to the protection of fundamental rights, then the (European) judge can cast the regulations aside. The Court of Justice of the European Union has previously declared regulations invalid due to privacy violations, for example the Telecom Data Protection Directive and the Privacy Shield. The Dutch courts also regularly invalidate privacy-invading regulations. Privacy First has previously successfully challenged the validity of legislation, for example in the proceedings about the Telecommunications Data Retention Act and in the proceedings against SyRI. Viewed against this background, the lawsuit against the UBO register is considered very promising.
Update 27 September 2021: this afternoon the court session took place in The Hague; click HERE for the pleading of our lawyer (pdf in Dutch). The judgment of the court of appeal is scheduled for 16 November 2021.
Summary proceedings against massive privacy violation by Automatic Number Plate Recognition (ANPR) camera surveillance
Challenging large-scale privacy violations in court has long been Privacy First’s established practice. In recent years, Privacy First has successfully done so against the central storage in the Netherlands of everyone’s fingerprints under the Dutch Passport Act, against the storage of everyone’s communications data under the Dutch Telecommunications Data Retention Act and – in coalition with other parties – against large-scale risk profiling of innocent citizens through the Dutch System Risk Indication (SyRI).
A current and urgent issue that equally merits going to court over, concerns the Dutch legislation on Automatic Number Plate Recognition (ANPR) which applies since 2019 under Art. 126jj of the Dutch Code of Penal Procedure. Under this piece of law, the number plate codes of millions of cars in the Netherlands (i.e. everyone’s travel movements) are stored continuously for four weeks in a central police database for criminal investigation purposes, regardless of whether one is suspected of anything. This is totally unnecessary, completely disproportionate and also ineffective, as was revealed in evaluation reports published today by the Dutch Research and Documentation Center (‘WODC’, part of the Dutch Ministry of Justice and Security). Supervision is lacking and the system can easily be abused, newspaper NRC Handelsblad recently confirmed in its reporting.
Privacy First has therefore prepared a lawsuit to have the ANPR legislation repealed on account of violation of European privacy law. Summary proceedings against the Dutch government will take place at the district court of The Hague on 10 November 2021. Through Pro Bono Connect, Privacy First has engaged CMS as the law firm that will take care of the litigation in this case. Our summons in summary proceedings can be found HERE (pdf in Dutch). If necessary, these preliminary proceedings will be followed by broader proceedings on the merits. After all, there is no doubt that the current ANPR law constitutes a massive privacy violation and simply does not belong in a free democratic society. Considering the relevant European case law, Privacy First deems the likelihood of successful legal action very high.
Case details: Privacy First vs. the State (Dutch Ministry of Justice and Security), Wednesday 10 November 2021 11.00 am, The Hague district court. You are welcome to attend the court hearing. A route description in Dutch can be found here.
Would you like to support these legal proceedings? Then please consider becoming a donor! Privacy First consists largely of volunteers and is entirely dependent on sponsorship and donations to pursue litigation.
The controversial and compulsory inclusion of fingerprints in passports has been in place in the EU since 2009. From that year on, fingerprints were also included in Dutch identity cards, even though under EU law there was no such obligation. While the inclusion of fingerprints in identity cards in the Netherlands was reversed in January 2014 due to privacy concerns, there is now new European legislation that will make the inclusion of fingerprints in identity cards compulsory as of August 2, 2021.
Dutch citizens can apply for a new identity card without fingerprints until August 2. After that, only people can do so who are ‘temporarily or permanently unable physically to have fingerprints taken’.
The Dutch Senate is expected to debate and vote on the amendment of the Dutch Passport Act in connection with the reintroduction of fingerprints in Dutch identity cards on July 13. In that context, Privacy First sent the following email to the Dutch Senate yesterday:
Dear Members of Parliament,
Since Privacy First was founded in 2008, we have opposed the mandatory collection of fingerprints for passports and identity cards. Since the introduction of the new Passport Act in 2009, Privacy First has done so through lawsuits, campaigns, freedom of information requests, political lobbying and by activating the media. Despite the subsequent Dutch discontinuation of the (planned) central storage of fingerprints in both national and municipal databases in 2011, everyone’s fingerprints are still taken when applying for a passport, and soon (as a result of the new European Regulation on ID cards) again for Dutch ID cards after this was retracted in 2014.
To date, however, the millions of fingerprints taken from virtually the entire adult population in the Netherlands have hardly been used in practice, as the biometric technology had already proven to be unsound and unworkable in 2009. The compulsory collection of everyone’s fingerprints under the Dutch Passport Act therefore still constitutes the most massive and longest-lasting privacy violation that the Netherlands has ever known.
Having read the current report of the Senate on the amendment of the Passport Act to reintroduce fingerprints in ID cards, Privacy First hereby draws your attention to the following concerns. In this context, we ask you to vote against the amendment of the law, in contravention of European policy. After all:
- As early as May 2016, the Dutch Council of State (Raad van State) ruled that fingerprints in Dutch identity cards violated the right to privacy due to a lack of necessity and proportionality, see https://www.raadvanstate.nl/pers/persberichten/tekst-persbericht.html?id=956 (in Dutch).
- Freedom of information requests from Privacy First have revealed that the phenomenon to be tackled (look-alike fraud with passports and identity cards) is so small in scale that the compulsory collection of everyone’s fingerprints is completely disproportionate and therefore unlawful. See: https://www.privacyfirst.nl/rechtszaken-1/wob-procedures/item/524-onthullende-cijfers-over-look-alike-fraude-met-nederlandse-reisdocumenten.html.
- In recent years, fingerprints in passports and identity cards have had a biometric error rate as high as 30%, see https://zoek.officielebekendmakingen.nl/kst-32317-163.html (Dutch State Secretary Teeven, January 31, 2013). Before that, Minister Donner (Security & Justice) admitted an error rate of 21-25%: see https://zoek.officielebekendmakingen.nl/kst-25764-47.html (April 27, 2011). How high are these error rates today?
- Partly because of the high error rates mentioned above, fingerprints in passports and ID cards are virtually not used to date, either domestically, at borders or at airports.
- Because of these high error percentages, former Dutch State Secretary Bijleveld (Interior and Kingdom Relations) instructed all Dutch municipalities as early as September 2009 to (in principle) refrain from conducting biometric fingerprint verifications when issuing passports and identity cards. After all, in the event of a ‘mismatch’, the ID document concerned would have to be returned to the passport manufacturer, which would lead to rapid societal disruption if the numbers were high. In this respect, the Ministry of the Interior and Kingdom Relations was also concerned about large-scale unrest and even possible violence at municipal counters. These concerns and the instruction of State Secretary Bijleveld still apply today.
- Since 2016, several individual Dutch lawsuits are still pending at the European Court of Human Rights in Strasbourg, challenging the mandatory issuing of fingerprints for passports and ID cards on the grounds of violation of Art. 8 ECHR (right to privacy).
- In any case, an exception should be negotiated for people who, for whatever reason, do not wish to give their fingerprints (biometric conscientious objectors, Art. 9 ECHR).
- Partly for the above reasons, fingerprints have not been taken for the Dutch identity card since January 2014. It is up to your Chamber to maintain this status quo and also to push for the abolition of fingerprints for passports.
For background information, see the report ‘Happy Landings' by the Scientific Council for Government Policy (WRR) that Privacy First director Vincent Böhre wrote in 2010. Partly as a result of this critical report (and the large-scale lawsuit brought by Privacy First et al. against the Passport Act), the decentralized (municipal) storage of fingerprints was largely abolished in 2011 and the planned central storage of fingerprints was halted.
For further information or questions regarding the above, Privacy First can be reached at any time.
The Privacy First Foundation
As an NGO that promotes civil rights and privacy protection, Privacy First has been concerned with financial privacy for years. Since 2017, we have been keeping close track of the developments surrounding the second European Payment Services Directive (PSD2), pointing out the dangers to the privacy of consumers. In particular, we focus on privacy issues related to ‘account information service providers’ (AISPs) and on the dangerous possibilities offered by PSD2 to process personal data in more extensive ways.
At the end of 2017, we assumed that providing more adequate information and more transparency to consumers would be sufficient to mitigate the risks associated with PSD2. However, these risks turned out to be greater and of a more fundamental nature. We therefore decided to launch a bilingual (Dutch & English) website called PSD2meniet.nl in order to outline both our concerns and our solutions with regard to PSD2.
Central to our project is the Don’t-PSD2-Me-Register, an idea we launched on 7 January 2019 in the Dutch television program Radar and in this press release. The aim of the Don’t-PSD2-Me-Register is to provide a real tool to consumers with which they can filter out and thus protect their personal data. In time, more options to filter out and restrict the use of data should become available. With this project, Privacy First aims to contribute to positive improvements to PSD2 and its implementation.
Protection of special personal data
In this project, which is supported by the SIDN Fund, Privacy First has focused particularly on ‘special personal data’, such as those generated through payments made to trade unions, political parties, religious organizations, LGBT advocacy groups or medical service providers. Payments made to the Dutch Central Judicial Collection Agency equally reveal parts of people’s lives that require extra protection. These special personal data directly touch upon the issue of fundamental human rights. When consumers use AISPs under PSD2, their data can be shared more widely among third parties. PSD2 indirectly allows data that are currently protected, to become widely known, for example by being included in consumer profiles or black lists.
The best form of protection is to prevent special personal data from getting processed in the first place. That is why we have built the Don’t-PSD2-Me-Register, with an Application Programming Interface (API) – essentially a privacy filter – wrapped around it. With this filter, AISPs can detect and filter out account numbers and thus prevent special personal data from being unnecessarily processed or provided to third parties. Moreover, the register informs consumers and gives them a genuine choice as to whether or not they wish to share their data.
We have outlined many of the results we have achieved in a Whitepaper, which has been sent to stakeholders such as the European Commission, the European Data Protection Board (EDPB) and the Dutch Data Protection Authority. And of course, to as many AISPs as possible, because if they decide to adopt the measures we propose, they would be protecting privacy by design. Our Whitepaper contains a number of examples and good practices on how to enhance privacy protection. Among other things, it lays out how to improve the transparency of account information services. We hope that AISPs will take the recommendations in our Whitepaper to heart.
Our Application Programming Interface (API) has already been adopted by a service provider called Gatekeeper for Open Banking. We support this start up’s continued development, and we make suggestions on how the privacy filter can be best incorporated into their design and services. When AISPs use Gatekeeper, consumers get the control over their data that they deserve.
Knowing that the European Commission will not be evaluating PSD2 until 2022, we are glad to have been able to convey our own thoughts through our Whitepaper. Along with the API we have developed and distributed, it is an important tool for any AISP that takes the privacy of its consumers seriously.
Privacy First will continue to monitor all developments related to the second Payment Services Directive. Our website PSD2meniet.nl will remain up and running and will continue to be the must-visit platform for any updates on this topic.
Today – on European Data Protection Day – the 2021 Dutch Privacy Awards were handed out during the Dutch National Privacy Conference, a joint initiative by Privacy First and the Dutch Platform for the Information Society (ECP). These Awards provide a platform for companies and governments that see privacy as an opportunity to distinguish themselves positively and to make privacy-friendly entrepreneurship and innovation the norm. The winners of the Dutch Privacy Awards 2021 are STER, NLdigital, Schluss, FCInet and the Dutch Ministry of Justice and Security.
Advertising without storage of personal data, contextual targeting: proven effectiveness
The Dutch Stichting Ether Reclame (Ether Advertising Foundation), better known as STER, was one of the first organizations in the Netherlands to abandon the common model of offering advertisements based on information collected via cookies. STER has developed a procedure that only uses relevant information on the webpages visited. No personal data are collected at all (data such as browser version, IP address and click-through behaviour). Advertisers submit their advertisements to STER, which are then put on the website in conformity with the protocol developed by STER, which is based on a number of simple categories. These categories are linked to the information that is shown, such as a TV program that someone has selected. The protocol has been built up and refined over the past period and now works properly.
In this way, STER kills several birds with one stone. Most importantly, initial applications show that this approach is at least as effective for advertisers as the old cookie-based way. Secondly, the approach removes parties from the chain. Data brokers who played a role in the old system are now superfluous. Apart from the financial gain for the chain, this also prevents data coming into the possession of parties the data should not end up with. And thirdly, STER stays in control of its own advertising campaigns.
This makes STER a deserved winner of the Dutch Privacy Awards. The concept developed is innovative and helps to protect the privacy of citizens without them having to make any effort. STER is also investigating the possibility of using the approach more broadly. This too is an innovation that the expert panel applauds.
In that sense STER’s approach is also a well-founded response to the data-driven superpowers on the market as it demonstrates that the endless collection of personal data is not at all necessary to get your message across, whether it is commercial or idealistic.
STER could perhaps also have been submitted as a Business-to-Business entry, but the direct interests of consumers meant that it was listed in the category of consumer solutions.
Organisational innovation and practical application: Data Pro Code
Entries for the Dutch Privacy Awards often relate to technical innovations. At NLdigital it is not the technology, but the approach that is innovative. It has given concrete meaning to GDPR obligations through agreements and focuses mainly on data processors, not on the responsible parties. This enables processors to make agreements more quickly, practically and with sufficient care – agreements which are also verifiable in this regard. Many companies provide services by making applications available which involve data processing. And that requires processing agreements, which are not easy to apply for every organization. Filling in the corresponding statement leads to an appropriate processing agreement for clients.
NLdigital’s code of conduct called Data Pro Code is a practical instrument tailor made for the target group: IT companies that process data on behalf of others. With the help of (600) participants/members, the Code is drawn up as an elaboration of Art. 28 of the GDPR. It has been approved by the Dutch Data Protection Authority and has led to a publicly accessible certification.
Winner: FCInet & Ministery of Justice and Security
Ma³tch, privacy on the government agenda: innovative data minimization
FCInet is innovative, privacy-enhancing technology that was developed by the Dutch Ministry of Justice and Security and the Dutch Ministry of Finance. It is meant to assist in the fight against (international) crime. Part of FCInet is Ma³tch, which stands for Autonous Anonymous Analysis. With this feature the Financial Criminal Investigation Services (FCIS) can share secure and pseudonymized datasets on a national level (for example with the Financial Intelligence Unit-Netherlands and the Fiscal Information and Investigation Service), but also internationally. Ma³tch is a technology that supports and enforces parties concerned to make careful considerations per data field. This is possible with regard to the question of which data these parties want to compare and on the basis of which conditions. This ensures that parties can set up the infrastructure in such a way that it can be technically enforced that data are exchanged only on a legitimate basis.
Through hashing, organization A encrypts (bundles of) personal data in such a way that receiving party B has the possibility to check whether a person known to organization B is also known to organization A. Only if it turns out that there is a match (because the list of known persons in hashed form of organization B is checked against the list of persons in the sent list) does the next step take place whereby organization B actually requests information about the person concerned from organization A. The check takes place in a secure decentralized environment, so organization A does not know whether there is a hit or not. The technology thus prevents the unnecessary perusal of personal data in the context of comparisons.
The open source code technology of FCInet offers broader possibilities for application, which is encouraged by the expert panel and was an important reason for the submission: it can be reused in many other organizations and systems. The panel therefore assessed this initiative as a good investment in privacy by the government, where, clearly, the issue of privacy really is on the agenda.
Schluss applied for the Dutch Privacy Awards in 2021 for the third time. That is not the reason for the Incentive Award, even though it may encourage others to persevere in a similar way.
The reason is that it is a very nice initiative, focused on the self-management of personal data. In the form of an app, private users are offered a vault for their personal data, whether they are of a medical, financial or other nature. Users decide which people or organizations gets access to their data. The idea is that others who are allowed to see the data no longer need to store these data themselves. Schluss has no insight into who uses the app, its role is only to facilitate the process. The technology, which is open source, guarantees transparency about the operation of the app.
Schluss won the prestigious Incentive Award because thus far the app has had only a beta release. However, promising projects have been started with the Volksbank and there is a pilot in collaboration with the Royal Dutch Association of Civil-law Notaries. With the mission statement (‘With Schluss, only you decide who gets to know which of your details’) in mind, Schluss chose to become a cooperation, an organizational form that appealed to the expert panel. With this national Incentive Award the panel hopes to encourage the initiators to continue along this path and to persuade parties to join forces with Schluss.
There are four categories in which applicants are awarded:
1. the category of Consumer solutions (business-to-consumer)
2. the category of Business solutions (within a company or business-to-business)
3. the category of Public services (public authority-to-citizen)
4. the incentive award for a ground breaking technology or person.
From the various entries, the independent expert panel chose the following nominees per category (listed in arbitrary order):
Roseman Labs (Secure Multiparty Computation)
Ministry of Health (CoronaMelder)
NLdigital (Data Pro Code)
FCInet & Ministry of Justice (Ma³tch)
STER (Contextual targeting)
During the National Privacy Conference all nominees presented their projects to the audience in Award pitches. Thereafter, the Awards were handed out. Click HERE for the entire expert panel report (pdf in Dutch), which includes participation criteria and explanatory notes on all the nominees and winners.
National Privacy Conference
The Dutch National Privacy Conference is a ECP|Platform for the Information Society and Privacy First initiative. Once a year, the conference brings together Dutch industry, public authorities, the academic community and civil society with the aim to build a privacy-friendly information society. The mission of both the National Privacy Conference and Privacy First is to turn the Netherlands into a guiding nation in the field of privacy. To this end, privacy by design is key.
These were the speakers during the 2021 National Privacy Conference in successive order:
- Monique Verdier (vice chairwoman of the Dutch Data Protection Authority)
- Judith van Schie (Considerati)
- Erik Gerritsen (Secretary General of the Dutch Ministery of Health, Welfare and Sport)
- Mieke van Heesewijk (SIDN Fund)
- Peter Verkoulen (Dutch Blockchain Coalition)
- Paul Tang (MEP for PvdA)
- Ancilla van de Leest (Privacy First chairwoman)
- Chris van Dam (Member of the Dutch House of Representatives for CDA)
- Evelyn Austin (director of Bits of Freedom)
- Wilmar Hendriks (chairman of the expert panel of the Dutch Privacy Awards).
The entire conference was livestreamed from Nieuwspoort in The Hague: see https://www.nieuwspoort.nl/agenda/overzicht/privacy-conferentie-2021/stream and https://youtu.be/asEX1jy4Tv0.
Dutch Privacy Awards expert panel
The independent expert Award panel consists of privacy experts from different fields:
- Wilmar Hendriks, founder of Control Privacy and member of the Privacy First advisory board (panel chairman)
- Ancilla van de Leest, Privacy First chairwoman
- Paul Korremans, partner at Comfort Information Architects and Privacy First board member
- Marc van Lieshout, managing director at iHub, Radboud University Nijmegen
- Alex Commandeur, senior advisor BMC Advies
- Melanie Rieback, CEO and co-founder of Radically Open Security
- Nico Mookhoek, privacy lawyer and founder of DePrivacyGuru
- Rion Rijker, privacy and data protection expert, IT lawyer and partner at Fresa Consulting.
In order to make sure that the Award process is run objectively, the panel members may not judge on any entry of his or her own organization.
In collaboration with the Dutch Platform for the Information Society (ECP), Privacy First organizes the Dutch Privacy Awards with the support of the Democracy & Media Foundation and The Privacy Factory.
Pre-registrations for the 2022 Dutch Privacy Awards are welcome!
Would you like to become a sponsor of the Dutch Privacy Awards? Please contact Privacy First!
A Dutch court has today handed down a judgment in preliminary injunction proceedings brought by Privacy First concerning the UBO register. The district court of The Hague confirmed that there is every reason to doubt the legality of the European money laundering directives which are the foundation of the UBO register. On this point the judge follows the very critical opinion of the European Data Protection Supervisor. The interim proceedings court rules that it cannot be excluded that the Court of Justice of the European Union (CJEU) will come to the conclusion that the public character of the UBO register is at odds with the proportionality principle. Questions over its legality were recently referred to the CJEU by a Luxembourg national court. As such, the Dutch court felt there is no need to do the same.
Privacy First had also requested a temporary deactivation of the UBO register. This, however, is a step too far for the court, which states that deactivating the register is not possible as long as the underlying EU guideline is still in force. It would put the Netherlands in a position in which it operates in violation of the European guideline. With this claim, the judge says, Privacy First is getting ahead of itself. Privacy First will examine the ruling on this point, also in view of possibly going into appeal.
‘The introduction of the UBO register would mean that privacy-sensitive data of millions of people will be up for grabs’, comments Privacy First’s attorney Otto Volgenant of Boekx Attorneys.’On all sides there are strong doubts whether this is actually an effective means in the fight against money laundering and terrorism. It’s like using a sledgehammer to crack a nut. The Court of Justice of the European Union will eventually adjudicate the case, and I expect it will annul the UBO register.’
At the start of this year, the Privacy First Foundation initiated fundamental legal action against the Dutch government on account of the new UBO register, which is linked to the Trade Register of the Dutch Chamber of Commerce. Under the law the UBO register is based on, all 1.5 million Dutch legal entities that are included in the Trade Register will have to make public all sorts of privacy-sensitive data about their Ultimate Beneficial Owners. This concerns personal data of millions of directors, shareholders and high executives of companies (including family businesses), foundations, associations, churches, social organizations, charities, etc. Privacy First deems that this is a massive privacy violation, one which also creates personal safety risks. That is why Privacy First has asked the court to immediately declare the UBO register unlawful. A lot of information in the register will be publicly available and can be requested by anyone. In Privacy First’s opinion this is completely disproportionate and an infringement of European privacy law. The CJEU will examine whether the European legislation on which the UBO register is based violates the fundamental right to privacy.
The ruling (in Dutch) by the interim proceedings court can be found here: http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2021:2457.
Update 15 April 2021: yesterday Privacy First filed an urgent appeal against the entire judgment with the Court of Appeal of The Hague. The appeal subpoena can be found HERE (pdf in Dutch). Privacy First requests the Court, inter alia, to ask preliminary questions about the UBO register to the European Court of Justice and to suspend the UBO register until these questions are answered. In view of the major interests at stake, Privacy First hopes that the Court of Appeal of The Hague will hear this case as soon as possible.
Update 17 August 2021: the court hearing in the urgent appeal of Privacy First against the judgment will take place on Monday 27 September at the Court of Appeal in The Hague.
Privacy First initiates legal action against the Dutch government on account of the recently-introduced UBO register. The preliminary injunction proceedings point at the invalidity of the legislation on which this register is based. The consequences of this new piece of legislation are far-reaching as the register contains very privacy-sensitive information. Data relating to the financial situation of natural persons will be up for grabs. More than 1.5 million legal entities that are registered in the Dutch Trade Register will have to make public details about their Ultimate Beneficial Owners (UBOs). The UBO register is publicly accessible: a request for information costs €2.50.
The UBO register aims to prevent money laundering but will lead to defamation.
The privacy breach that is the result of the UBO register and the public accessibility of sensitive data are disproportionate. The goal of the register is to thwart money laundering and terrorist financing. In order to achieve this goal there is no need for a UBO register, at least not one that is publicly accessible.
That is why Privacy First wants the UBO register to be rendered inoperative by a court, which, in case necessary, should submit questions of interpretation to the highest court in Europe: the European Court of Justice. In cases like these, the judiciary will have the final say. It is not uncommon for a court to overrule privacy-violating legislation and in this respect, Privacy First’s litigation has been successful in the past.
The proceedings will take place before The Hague District Court on 25 February 2021 at 12pm. The entire summons can be found HERE (pdf in Dutch). The ruling will follow two or three weeks after the hearing.
Background of the UBO register case
On 24 June 2020, the Dutch ‘Implementation Act for the Registration of Ultimate Beneficial Owners of Companies and Other Legal Entities’ came into effect in the Netherlands. On the basis of this new Act, a new UBO register which is linked to the Commercial Register of the Dutch Chamber of Commerce will contain information about all ultimate beneficial owners of companies and other legal entities founded in the Netherlands. The register should indicate how many shares are owned by the UBO: 25-50%, 50-75% or more than 75%. Furthermore, the name, month and year of birth as well as the nationality of the UBO will be made public, with all the privacy risks this entails.
Since 27 September 2020, newly founded entities have to register the ultimate beneficial owners in the UBO register. Existing legal entities will have to do so before 27 March 2022.
The Act provides very few possibilities to safeguard information. This is possible only for persons that are protected by the police, minors and those placed under guardianship. This means that the shares of practically every UBO will become a matter of public record. Anyone has access to the UBO register, with extracts coming at a price of €2.50.
European money laundering directive
The new Act stems from the fifth European money laundering directive, which obliges EU Member States to register UBOs and disclose their details to the public. According to the European legislator, this contributes to the proclaimed objective of countering money laundering and terrorist financing. The transparency is supposed to be a deterrent for persons who set out to launder money or finance terrorism.
Massive privacy violation and fundamental criticism
The question is whether this produces a windfall effect. Registering the personal data of all UBOs and making these publicly available is a generic precautionary measure. 99.99% of UBOs have nothing to do with money laundering or terrorist financing. Even if it were proportionate to collect information on all UBOs, making that information available only to government agencies engaged in combating money laundering and terrorism should suffice. It is not appropriate to disclose that information to everyone. The European Data Protection Supervisor (EDPS) deemed this privacy violation to be disproportionate. This opinion, however, did not lead to an amendment of the European Directive.
When this Act was discussed in Dutch Parliament, fundamental criticism came from various corners of society. The business community made its voice heard because it perceived privacy risks and feared − and now indeed experiences − an increase in costs. UBOs of family-owned companies that have remained out of the public eye up until now are running major privacy and security risks. There was also a great deal of attention for the position of social organizations − such as church communities and NGOs − that attach great importance to the protection of those affiliated with them. Associations and foundations that do not have owners face a different burden: they have to put the data that are already in the Trade Register in yet another register. Unfortunately these complaints have not resulted in any changes to the legislation.
Legal proceedings look promising
Privacy First has initiated legal proceedings against the UBO register for violation of the fundamental right to privacy and the protection of personal data. Privacy First asks the Dutch court to render the UBO register inoperative in the short term and, if necessary, to submit questions of interpretation on this matter to the highest court in Europe, the Court of Justice of the European Union.
The Dutch Act as well as the underlying European directive are in conflict with both the European Charter of Fundamental Rights and the GDPR. It is the legislator who has created this legislation, but it will be up to the court to do a thorough review thereof. Ultimately, the court has the last word. If the (European) legislator fails to take adequate account of the protection of fundamental rights, then the (European) court can invalidate this legislation. This would not be unique. The Court of Justice of the European Union has previously declared legislation invalid due to privacy violations, for example the Data Retention Directive and, more recently, the Privacy Shield. Dutch courts too regularly annul privacy-invading regulations. Privacy First has previously successfully challenged the validity of legislation, for example in the proceedings concerning the Telecommunications Data Retention Act and the System Risk Indication (SyRI). Viewed against this background, a positive outcome in the case against the UBO register is all but unlikely.
This week the Dutch House of Representatives will debate the ‘temporary’ Corona emergency law under which the movements of everyone in the Netherlands can henceforth be monitored ‘anonymously’. Privacy First has previously criticized this plan in a television broadcast by current affairs program Nieuwsuur. Subsequently, today Privacy First has sent the following letter to the House of Representatives:
Dear Members of Parliament,
With great concern, Privacy First has taken note of the ‘temporary’ legislative proposal to provide COVID-19 related telecommunications data to the Dutch National Public Health Institute (RIVM). Privacy First advises to reject this proposal on account of the following fundamental concerns and risks:
Violation of fundamental administrative and privacy principles
- There is no societal necessity for this legislative proposal. Other forms of monitoring have already proven sufficiently effective. The necessity of this proposal has not been demonstrated and there is no other country where the application of similar technologies made any significant contribution.
- The proposal is entirely disproportionate as it encompasses all telecom location data in the entire country. Any form of differentiation is absent. The same applies to data minimization: a sample would be sufficient.
- The proposal goes into effect retroactively on 1 January 2020. This violates legal certainty and the principle of legality, particularly because this date is long before the Dutch ‘start’ of the pandemic (11 March 2020).
- The system of ‘further instructions from the minister’ that has been chosen for the proposal is completely undemocratic. This further erodes the democratic rule of law and the oversight of parliament.
- The proposal does not mention 'privacy by design' or the implementation thereof, while this should actually be one of its prominent features.
Alternatives are less invasive: subsidiarity
- The State Secretary failed to adequately investigate alternatives which are more privacy friendly. Does she even have any interest in this at all?
- Data in the possession of telecom providers are pseudonymized with unique ID numbers and as such are submitted to Statistics Netherlands (CBS). This means that huge amounts of sensitive personal data become very vulnerable. Anonymization by CBS happens only at a later stage.
- When used, the data are filtered based on geographical origin. This creates a risk of discrimination on the basis of nationality, which is prohibited.
- It is unclear whether the CBS and the RIVM intend to ‘enrich’ these data with other data, which could lead to function creep and potential data misuse.
Lack of transparency and independent oversight
- Up until now, the Privacy Impact Assessment (PIA) of the proposal has not been made public.
- There is no independent oversight on the measures and effects (by a judge or an independent commission).
- The GDPR may be applicable to the proposal only partially as anonymous data and statistics are exempt from the GDPR. This gives rise to new risks of data misuse, poor digital protection, data breaches, etc. General privacy principles should therefore be made applicable in any case.
Structural changes and chilling effect
- This proposal seems to be temporary, but the history of similar legislation shows that it will most likely become permanent.
- Regardless of the ‘anonymization’ of various data, this proposal will make many people feel like they are being monitored, which in turn will make them behave unnaturally. The risk of a societal chilling effect is huge.
Faulty method with a significant impact
- The effectiveness of the legislative proposal is unknown. In essence, it constitutes a large scale experiment. However, Dutch society is not meant to be a living laboratory.
- By means of data fusion, it appears that individuals could still be identified on the basis of anonymous data. Even at the chosen threshold of 15 units per data point, the risk of unique singling out and identification is likely still too large.
- The proposal will lead to false signals and blind spots due to people with several telephones as well as vulnerable groups without telephones, etc.
- There is a large risk of function creep, of surreptitious use and misuse of data (including the international exchange thereof) by other public services (including the intelligence services) and future public authorities.
- This proposal puts pressure not just on the right to privacy, but on other human rights as well, including the right to freedom of movement and the right to demonstrate. The proposal can easily lead to structural crowd control that does not belong in a democratic society.
Specific prior consent
Quite apart from the above concerns and risks, Privacy First doubts whether the use of telecom data by telecom providers, as envisaged by the legislative proposal, is lawful in the first place. In the view of Privacy First, this would require either explicit, specific and prior consent (opt-in) from customers, or the possibility for them to opt-out at a later stage and to have the right to have all their data removed.
It is up to you as Members of Parliament to protect our society from this legislative proposal. If you fail to do so, Privacy First reserves the right to take legal action against this law.
The Privacy First Foundation
The Privacy Collective press release
Millions of Dutch internet users victim of unlawful collection and use of personal data
The Privacy Collective takes Oracle and Salesforce to Court
The Privacy Collective - a foundation that acts against violation of privacy rights - is taking Oracle and Salesforce to Court. The foundation accuses the technology concerns of unlawfully collecting and processing data of millions of Dutch internet users. The foundation has launched a class action, a legal procedure in which compensation is claimed for a large group of individuals. It is the first time that this legal instrument is used in the Netherlands in a case of infringement of the General Data Protection Regulation (GDPR).
Christiaan Alberdingk Thijm, lead lawyer in the case: “This is one of the largest cases of unlawful processing of personal data in the history of the internet. Almost every Dutch individual who reads or views information online is structurally affected by the practices of Oracle and Salesforce. Practices that merely serve a commercial purpose.”
Online shadow profile
Oracle and Salesforce collect data from website visitors at any time and on a large scale. By combining this with additional information, they create a personal profile of each individual internet user. The millions of profiles are used, among other things, to offer personalized online advertisements and unlawfully shared with numerous commercial parties, including ad-tech companies. The tech giants collect their information using - among other things - specially developed cookies. Alberdingk Thijm: “Most people do not know that they have such an online 'shadow profile'. They don't know what it looks like and have certainly not given legitimate consent.” For the collection and sharing of personal data, Oracle and Salesforce are obliged to ask for permission under the GDPR. “These parties violate internet users' right to privacy. The right to protection of personal data and the right to protection of privacy are recognized as fundamental rights", says Alberdingk Thijm.
The possibility to claim damages in a class action was recently created under Dutch law.“Claiming damages in a class action is an important tool to ensure the enforcement of the GDPR,” says Joris van Hoboken, a board member of the foundation and professor in Information Law. “It gives the GDPR teeth.” The Privacy Collective calls upon individual consumers to register with the foundation in order to show their support. Based on the number of victims, the total extent of the damage could exceed 10 billion euros. Several organizations support The Privacy Collective's campaign, including Privacy First, Bits of Freedom, Qiy Foundation and Freedom Internet. The claims are being fully funded by Innsworth, a litigation funder. The organization’s funding enables the benefits of scaling common claims in a collective action, without any individual claimants being exposed to litigation costs. Inssworth finances a similar class action in England and Wales, which is currently being prepared.
Source: The Privacy Collective press release, 14 August 2020.
More information: https://theprivacycollective.eu/en/.
With great concern, Privacy First has taken note of the intention of the Dutch government to employ special apps in the fight against the coronavirus. In Privacy First’s view, the use of such apps is a dangerous development because it could lead to stigmatisation and numerous unfounded suspicions, and may also cause unnecessary unrest and panic. Even when ‘anonymized’, the data from these apps can still be traced back to individuals through data fusion. In case this technology will be introduced on a large scale, it will result in a surveillance society in which everyone is being continuously monitored – something people will be acutely aware of and would lead to an imminent societal chilling effect. Furthermore, there is a substantial risk that the collected data will be used and misued for multiple (illegitimate) purposes by companies and public authorities. Moreover, if these data fall into the hands of criminal organizations, they will be a gold mine for criminal activities. For Privacy First, these risks of Corona apps do not outweigh their presumed benefits.
The right to anonymity in public space is a fundamental right, one that is crucial for the functioning of our democratic constitutional State. Any democratic decision to nullify this right is simply unacceptable. If indeed the deployment of ‘Corona apps’ will be widespread, then at least their use should be strictly anonymous and voluntary. That is to say, they should be used only for a legitimate, specific purpose, following individual, prior consent without any form of outside pressure and on the premise that all the necessary information is provided. In this respect, privacy by design (embedding privacy protection in technology) must be a guiding principle. For Privacy First, these are stringent and non-negotiable prerequisites. In case these conditions are not met, Privacy First will not hesitate to bring proceedings before a court.