Banking Secrecy

Ban-king Se-cre-cy n. [duty of discretion obliging bank staff to keep customer data secret from third parties and authorities]

Assurance of Discretion to Customers

Banking secrecy (also called "bank-client confidentiality") protects the privacy of banking customers. This duty of discretion obliges bank staff to keep customer data confidential, ie, secret from third parties and authorities. It is comparable to the duty of confidentiality which binds doctors and lawyers. However, unlike medical and legal professionals, bank employees commit a criminal offence when they divulge customer data. That is to say, the Swiss state will prosecute the offence even if the damaged party has not lodged a complaint.

Banking secrecy also exists in other countries, with Austria and Luxemburg's laws most closely resembling the Swiss model.

Limited Validity

Swiss banking secrecy does not apply without restrictions. It can be waived for criminal investigators where there is suspicion of criminal activity, such as money laundering, organised crime or the financing of terrorism. In the case of tax evasion, banking secrecy can only be waived if there is concrete suspicion that an offence has been committed, and if the country affected is party to a double taxation agreement (DTA) with Switzerland made after 1 July 2009 and conforming to the OECD standard. Switzerland has only negotiated OECD-standard DTAs with industrialised nations. So, for the foreseeable future, there will still be no cooperation with developing countries on tax evasion cases.