Banking secrecy has been under scrutiny during the past few
years, with Swiss and Luxembourg banks under pressure to relax
banking secrecy rules. In Cyprus, the Banking Law (66(I)/97, as
amended) contains several provisions concerning banking secrecy.
Other laws are also applicable, such as the Personal Data
Protection Law (138(I)/2001).
According to Section 29(1) of the Banking Law, all employees,
directors, managers, chief executives, agents and any other persons
who have access to the records of a bank are prohibited - both
during their employment or professional relationship with the bank
and after the termination thereof - from giving out, divulging,
revealing or using for their own benefit any information regarding
the account of any individual customer of the bank. Individual
customers include both physical and legal persons. The provisions
of Section 29 apply to:
- banks licensed in Cyprus;
- any branch of a bank of an EU member state established in Cyprus; and
- any bank which provides cross-border services.
The above-mentioned provisions are simple and aim to protect all information that can be derived from the accounts of a bank's customers. However, banking secrecy rules are not applicable where:
- the customer or its personal representative gives written consent for the information to be used;
the customer is declared bankrupt or, in the case of a company, is wound up;
- civil proceedings have been initiated between the bank and the company relating to the customer's account;
- the information is provided to the police under the provisions of any other law, or to any other duly authorised public officer or to the court during the investigation or prosecution of a criminal offence;
- the bank has been served with a court order relating to the customer's account;
- the information is required by an employee of the same bank or the same group in the course of his or her duty;
- the information is required to assess the creditworthiness of a customer in connection with a good-faith commercial transaction, provided that such information is of a general nature;
- the information is supplied for the purpose of maintaining and operating the Central Information Register;
- the information is necessary for reasons of public interest or for the protection of the bank's interests; or
- the information is provided under Section 74 of the Covered Bonds Law.
The rules enhance the trustworthiness of banks and credit institutions and encourage them to impose internal structures in order to ensure compliance with the above provisions by banks' employees and officers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
