The Thirteenth International Symposium on Economic Crime — Banking on Secrets: The Universal Balancing Act

Publication Date01 January 1996
Date01 January 1996
SubjectAccounting & finance
Journal of Financial Crime Vol. 3 No. 3 Symposium Report
The Thirteenth International Symposium on
Economic Crime Banking on Secrets:
The Universal Balancing Act
A unifying theme apparent at this year's Sym-
posium was the need for balance when lifting the
veil of bank secrecy: (1) the need to protect civil
liberties versus the need to fight crime; (2) the
bank's need to balance its role as policeman while
furthering its commercial objectives; (3) the neces-
sity of weighing international cooperation against
the awareness that individual nations jealously
guard their own legislative regime; (4) the dicho-
tomy of technology that serves both to protect and
penetrate secrecy; (5) the balance required when
investigating crimes.
Expectations of confidentiality
A right to privacy is preserved in a variety of inter-
national Conventions and domestic Bills of
Rights.1 So much so, it could be said that the
individual has an entrenched expectation of
to privacy in many jurisdictions. The question is
the extent to which those rights exist. In the US,
for example, it has been established that there is no
constitutional right to financial privacy.2 John Bre-
slin,3 however, argued that in Article 8 of the
European Convention on Human Rights (ECHR),
the 'right to a private life' probably includes finan-
cial privacy because one's commercial life is an
extension of one's private life. William Tupman4
stressed that civil liberties cannot be said to be
universal as their very existence depends on
whether an individual can afford to fight contra-
ventions thereof through the court system.
There is, in any event, an expectation of con-
fidentiality in the banker-customer relationship
which arises from their contractual nexus.5 There
in fact, little dissent that legitimate secrets
should be preserved.6
Many of the speakers7 at the Symposium took
the famous English case of
v National Pro-
and Union Bank of England8 as their starting
point which describes the four basic situations in
which bank secrecy is qualified: (i) where a finan-
cial institution is legally compelled to disclose; (ii)
where there is a duty to the public to disclose; (iii)
where the interests of the financial institution
require disclosure; (iv) where disclosure is made at
the request or with the consent of the customer.
Bank secrecy has been increasingly abused by
criminals and used as a safety screen by banks.
This has led to the making of inroads into con-
fidentiality in most jurisdictions. Stanley Morris9
pointed out in his keynote address that 'when the
G7's Financial Action Task Force [FATF] made
the limitation of bank secrecy one of its central
it recognised an even more basic proposi-
tion namely that to accept supposedly "prin-
cipled indifference" by bankers to the source of
funds is to accept criminal behaviour. Taking
criminal funds means supporting criminal enter-
Causes of bank secrecy
In order to tackle bank secrecy its causes need to
be explored. There arc many social, economic and
political factors that promote bank secrecy. Per-
ceived political changes and the threat of political
persecution10 as well as economic factors such as
confiscatory tax policies or measures affecting the
convertibility of one currency into another may
result in the flight of capital through secret chan-
nels of money. Bribery and corruption can become
an accepted way of life; secrecy promotes bribery
and corruption and vice versa.11 Mr Kumar sug-
gested that to protect legitimate civil liberties while
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