BANKING SECRECY

General rule

Tournier v. National Provincial & Bank of England - the bank disclosed the pltfs default in payment and also his attitude as a gambler to two directors in the company where pltf work. Pltf was terminated from work. Held: Bank has a duty not to disclose their clients affair and a/c; the bank was liable for slander & has to pay damages to the pltf

Exception

Bankers duty of confidentiality is not absolute - a bank can legally disclose information about its customer: where the bank is compelled by law to disclose the information if the bank has a public duty to disclose the information if the banks own interests require disclosure; and where the customer has agreed to the information being disclosed.

General rule
S.97(1) of BAFIA - no director/officer (employee & CEO), external bureau, agent appointed by institution, all persons who have access to the records (eg. lawyers, auditors) can breach banking secrecy (give, produce, divulge, reveal, publish, disclose or make record any information relating to affair or a/c of customer).

-during or after the tenure of employment

Cases

Wako Merchant Bank (Spore) Ltd v. Lim Lean Heng [2003] 5 mlj 233 -the intention of the parliament to incorporate s.97 is to protect a customers secrecy of his affairs and account Maju Holding SB v. Kamala Devi Ramadas [2003] 2 mlj 36 - appellant entered into contract to buy share of Ipmuda Bhd. Appellant has cancel the contract when he found out that respondent is not the actual owner of the shares. -the appellants application to disclose the respondents info was set aside as it was contrary to s.97(1)

Exception

S. 96 OF BAFIA Protects the CB (BNM) and the minister in making investigations, inspections, examinations, etc. but emphasizes that they cannot specifically enquire into the affairs of any individual customer of any licensed institution permit to investigate limit the area of investigation

exception
S. 97(2) of BAFIA Where documents already lawfully available to the public from any source other than the licensed institution, so banking secrecy shall not apply eg. document from Msian Anti-Corruption Comm. Banking secrecy also does not apply to any info in the form of a summary or collection of info where info relating to any particular institution or any particular customer cannot be ascertained from it. S.97(3) no further disclosure after breach of s.97(1)

Exception
S.98 of BAFIA Disclosure to CB, officers of CB, Advisory Panel or any person appoint by CB for the exercise of their powers or discharge of their duty. Disclosure to those rendering professional service to the CB - authorised in writing by CB to obtain info for the purpose of his services to CB

Exception
S.99 of BAFIA disclosure is permitted in the following situations; a)Customer/personal representative gives written consent to disclose the info Tan Lay Soon v. Kam Wah Theatre (MUF Bhd., intervener) (1992) 2 MLJ 432 Fact: P sue D for breach of contract on certain land. The land has been charged by D to a bank. P want the bank to disclose the amount owed under the charge. Held: Bank has already commenced proceedings and obtained an order for sale, it had already disclose Ps a/c in the proceeding; so did not breach duty of secrecy.

Exception
b)Customer is adjudged as a bankrupt inside or outside Malaysia(RM30,000). c)The info is for a bona fide credit enquiry d) In criminal/civil proceedings between bank and customer or between bank and two or more parties making adverse claim s to money in a customers a/c where bank seek relief by way of interpleader. e) Bank is serve garnishee order f) To external bureau or agent appoint by bank with prior written consent of CB.

Exception
g) Disclosure is required or authorized under any other provision of BAFIA. h) Disclosure authorized under Federal law for police officer to investigate any offence under such law but limited to the a/c and affairs of person suspected of the offence. i) Disclosure is authorized in writing by CB.

Exception
S.99(2) of BAFIA Disclosure for the purpose of proceeding in court to be held in camera secret btwn the court and the parties

S.99(3) of BAFIA Without consent of the court, Cannot publish the identity (name, add., photos) of the parties During proceedings or at any time after the proceedings concluded.

Exception
S.100 of BAFIA Banking secrecy cannot limit the powers conferred upon the h/ct by the Bankers Book (Evidence) Act 1949 to prohibit obedience to an order made under the Act The power of H/Ct does not extend to allow the bank to give evidence outside of Msia Refer to cases: AG of Hong Kong v. Zauyah Wan Chik AG of Hong Kong v. Lorrain Esme Osman (1994) 3 MLJ 480

APPEAL: (Per Gopal Sri Ram JCA) As s 97 of the BAFIA was not expressed to have extra-territorial effect, a disclosure of confidential information in the courts of Hong Kong made in contravention of it could not found criminal liability in Malaysia. Therefore, the respondents would not be criminally liable if they were to give evidence in Hong Kong upon the matters covered by the letters of request

For an alleged breach of confidence that occurred abroad to be actionable in Malaysia, it must first be actionable if the particular disclosure were made in Malaysia in the same circumstances in which it was made in the foreign country, and secondly the disclosure of the confidential information must not be justifiable by the law of the country in which the alleged breach of confidence occurred.

Exception
S.101 of BAFIA Disclosure on examination by Relevant Overseas Supervisory Authority Books, account and transactions Representative office in Msia of a foreign institution or subsidiary/associate of foreign institution. Permission from CB

Disclosure By Compulsion of Law

Bankers Book (Evidence) Act 1949 S.4(2) bank officer shall give evidence verbally or with affidavit S.7(1) a party to the proceeding may exam and take a copy of note from bankers book Evidence Act 1950 S.90C apart from s.90A & 90B, BB (evidence) Act 49 is also used as an evidence in any procedure

Evidence Act 1950 -S90A - document produced by a computer, or a statement contained in such document, would be admissible in any suit or proceeding as evidence of any fact stated therein. - The admissibility of the computer document is made subject to the condition that the document was produced in the course of the ordinary use of the computer for that purpose.

It can be proved by a certificate given by a person responsible for the management of the operation of the computer or for the conduct of the activities it was used for. - 90B allows the court to draw inferences from circumstances relating to evidence admissible under section 90A, including the manner and purpose of its creation and its contents, the purpose of its production in evidence, and the physical effectiveness of the computer, equipment and other devices used in creating the document, when evaluating the probative value of such evidence.
-

Companies Act 1965 S.218 - winding up - disclosure of info for the purpose of proceeding Income Tax Act 1967 S.80 Company Director has an access to the documents

Internal Security Act 1960 (repelled) S.76 police officer shall make a search at the bank premise at any time get a copy of banking secrecy w/out any charges - Security Offences (Special Measures) 2012 Act (SOSMA).

Kidnapping Act 1961 - S7 -The Public Prosecutor may, order direct any bank in Malaysia not to pay any money out of a/c nor to pay cheques drawn on such bank account for a specified period not exceeding one month if he is satisfied that the money will be use for payment of ransom - Any officer of a bank who complies with an order of the PP shall be relieved of any liability in respect of the payment prohibited by such order.

A bank which fails to comply with an order of the PP shall be guilty of an offence and liable on conviction to a fine not exceeding five thousand ringgit. S8 - PPs power to order inspection of books, accounts,receipts, vouchers or other documents.

Anti Money Laundering & Terrorism Act 2001 Part III - disclosure is required to enable information sharing between competent authorities and the regulated institutions. Part IV - disclosure is also critical to enable banks and other regulated institutions to comply with the reporting requirements under the Act.

Dangerous Drugs (Forfeiture of Property) Act 1988 Part IV power of entry, search and seizure.

The Whistle Blower Protection Act 2010 (Act 711) Part III (Whistle Blower Protection) National Feedlot Centre case.

MM2H (Malaysia My 2nd Home).

Banking Secrecy America

The Bank Secrecy Act of 1970 ( or known as the Currency and Foreign Transactions Reporting Act) requires financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering. It requires financial institutions to keep records of cash purchases of negotiable instruments, and file reports of cash purchases of these negotiable instruments of more than $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.

England

It is an implied term of the contract between customers and their banks and building societies that these firms will keep their customers information (all the information that the bank has about the customer) confidential. consequences of a breach of confidentiality whether the customer has experienced a true (and reasonably foreseeable) financial loss; or the real extent to which the customer has suffered distress, embarrassment, or inconvenience.

SWISS BANKING SECRECY

Swiss Banking Act of 1934 banks are allowed to protect personal information about their customers, through the use of numbered bank accounts (a normal bank account where the name of the bank client is replaced by a number or a code word; the account holder is only known to a restricted number of bank employees and the name of the client does not appear in documents such as bank account statements.

the principle of bank secrecy is considered as private banking. It has been accused by NGOs and governments of being one of the main instruments of underground economy and organized crime, only help legalized tax evasion, money laundering . Under the principle of bank secrecy, privacy is statutorily enforced, with Swiss law strictly limiting any information shared with third parties, including tax authorities, foreign governments or even Swiss authorities, except when requested by a Swiss judge's subpoena.

only permits a bank to share information with others in cases of severe criminal acts, such as identifying a terrorist's bank account. Any bank employee violating a client's privacy is punished quite severely. Many offshore banks, located in tax havens such as in the Cayman Islands and Panama, also have strict privacy laws.

Tax heaven means: -nil or nominal taxes; -lack of effective exchange of tax information with foreign tax authorities; -lack of transparency in the operation of legislative, legal or administrative provisions; -no requirement for a substantive local presence; and -self-promotion as an offshore financial center.

An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include: greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking Act) low or no taxation (i.e. tax havens) easy access to deposits (at least in terms of regulation) protection against local political or financial instability