Banking secrecy

Bank secrecy is the legal power of a financial institution not to disclose to the competent tax authorities the private information of its clients. It is usually considered a specific variant of professional secrecy although it admits numerous exceptions.

In the same way as other types of professional secrecy, bank secrecy extends to all the information that the entity has about its client, as well as all the actions that derive from its activity with him. However, the main difference with conventional professional secrecy is that the bank may imply the non-publication of private data at the request of the public administration.

This is how there are different degrees of bank secrecy, ranging from the protection of customer information to the general public to the highest level of privacy.

Exceptions to bank secrecy

There are usually exceptions provided by financial regulation, such as when an investigation into possible crimes is ongoing. This implies that in many cases a bank may not provide data on its clients before public administration, but it would be forced to do so before judicial authorities.

At the beginning of the 21st century, bank secrecy existed in countries such as Switzerland or Luxembourg and in the so-called “tax havens” (Monaco, Singapore, Cayman Islands, etc.), leading to strong controversies as it has sometimes made it difficult for others to fight states against tax evasion and money laundering. Normally, bank secrecy is usually associated with very small countries, since in larger states, fiscal transparency could be seriously hampered. However, there are also cases of countries that apply bank secrecy without being micro-states, such as Lebanon and the Dominican Republic.

 

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