(From my book:Banking & Corporate Business Laws)
The relationship between a bank and his client is, normally, looked at as a special relation due to the trustworthiness and confidence supporting and surrounding this relation all through.
The customer comes to the bank with full trust that all his dealings, banking transactions, account details… etc., are well kept and taken care of in the most appropriate professional banking standard and in complete secrecy from all undesired eyes or ears.
The secrecy golden rule goes back to the inception of banking business and has been codified and provided for in the banking laws and regulations. This is in addition, to the fact that the secrecy of information regarding all clients is a built-in banking practice that has been totally observed by all prudent banks and bankers.
A relevant question has been raised by bankers and other interested bodies, that is to say, what are the limits regarding the duty of the banks with reference to information related to their customers? We & all have been asked about this point, many times..
As a rule the duty of secrecy goes beyond the state of the account. It extends at least to all transactions that go through the account, and to the securities, if any, given in respect of the account. It is very important to mention that the duty of secrecy, in relation to such matters, extends even beyond the period when the account is closed, or ceases to be active for any reason.
The duty of secrecy also, in almost all cases, extends to information obtained from other sources if the occasion upon which the information was obtained arose out of the banking relations of the bank and his customer. As example, when assisting the bank in conducting the business of the customer or in cases of decisions regarding treatment of their customers. In this case, however, the duty is not indefinite but it does not extend to information which the customer has obtained after he has ceased to be a customer of the bank.
Legally speaking, disclosure of information is prohibited as mentioned by the law, however, this prohibition may \ could be not applicable or could be overruled particularly when the concerned customer gives clear approval or allows the disclosure of all or certain information. Herein, the customer is free with reference to this approval because the rule is primarily for the protection of his interests.
The prohibition regarding the information is not applicable and does not apply to any information which at the time of disclosure is already public, by any means. Also, it does not apply to information that is normally given by banks in certain forms “formats” that are framed in a certain way not to enable disclosure of specific information related to any particular person or customer. These forms are normally required by central banks or other supervisory or competent bodies according to the law.
Banks are, as a general rule, not breaching the golden rule of confidentiality of information when they are required to disclose the information by the law or in execution to Courts orders \ verdicts which are normally based on the applicable laws.
We need to say at this juncture, that any disclosure or any request for disclosure should be based on the law and in execution to the law. I am referring to this particular point because banks sometimes receive instructions from certain government institutions or semi-government institutions to disclose some information regarding their customers. In all cases banks should always strictly abide by the law and it makes no difference from where the instruction or request is coming. Following the law will, no doubt, safe the interests of the bank and the customers at the same time.
Another instance wherein a bank may breach the confidentiality rule is when the bank is having a dispute with the customer, and the justification for this is to protect the interests of the bank. Herein, the concerned bank could disclose the information that is required to safeguard its interests versus the customer, however, banks should exercise this jurisdiction within the required reasonable limits….
From my experience, banks with respect to disclosure of information regarding their clients, are very strict, cautious, careful and abide by best practices and professionalism. This safeguards the interests of all parties and the banking industry…
Dr . AbdelGadir Warsama Ghalib
Founder & Principal Legal Counsel
Dr.AbdelGadir Warsama Consultancy
E-mail : awarsama@warsamalc.com
