Bank secrecy

According to art. 104 of the Banking Law (hereinafter PrBank), the bank, persons employed therein, as well as persons through whom the bank performs banking activities are obliged to maintain banking secrecy, which includes all information regarding banking operations, obtained in during the negotiations, during the conclusion and performance of the contract under which the bank performs the task. Banking secrecy covers not only natural persons, but also legal persons, entrepreneurs and organizational units that do not have legal personality. The secret covers mainly information on the turnover and balance of bank accounts and accepted deposits of valuable clients. At the moment when the bank secret is violated, the bank bears all the consequences and responsibility.

The formation of bank secrecy

It was formulated for the first time in the banking law in Switzerland in 1934. However, it was in the Code of Hammurabi that the first provisions were made, which concerned the protection of bankers' clients. The history of bank secrecy is linked to the history of banks, which is divided into two stages. In the first there was no banking law, it lasted until the 19th century, while in the second stage, regulations concerning this area of law began to appear. It was in the second stage that the notion of bank secrecy was formulated.

The history of bank secrecy in Poland

Already in the days of the Enlightenment, we can find the beginnings of banking development in Poland, while the first regulation in this field dates back to 1924. (Regulation of the President of the Republic of Poland of June 27, 1924. About the Postal Savings Bank). There was a provision for keeping absolute secrecy about existing deposits and accounts, as well as their amount. In the Ordinance of the Minister of the Treasury, the statute of Bank Gospodarstwa Krajowego also contains provisions on confidentiality (Ordinance of the Minister of the Treasury of May 31, 1924 on the statute of Bank Gospodarstwa Krajowego (Dz. U. of 1924 No. 46 item 478). This provision said that: "members of the Board, the Directorate, as well as all Bank employees and associates, are bound to keep the secret in all matters concerning the Bank's private interests and accounts." Regulation of the Minister of the Treasury on the statute of Bank Gospodarstwa Krajowego 1924 Dz. U. 1924, No. 46 item 478.

In the next legal act - Presidential Order of December 27, 1924. The terms of banking operations and supervision over these activities also include provisions relating to secrecy. He claimed that the council members must keep a secret in the performance of their duties and that they should do it personally. Similarly, bank officials or members of the management must keep the secret. Presidential Decree on the conditions of performing banking activities and supervision over these activities in 1924. Dz.U. 1924 No. 114 item 1018. The next regulations will include: Ordinance of the President of the Republic of Poland of March 17, 1928. On banking law, the Banking Law Act of February 26, 1982. And the Banking Law Act of January 31, 1989. The Act of August 29, 1997 is now in force. On banking law.

Regulation sources

The basic part of the regulation determining the normative shape of banking secrecy is art. 104, 105, 106b PrBank (Act of 29 August 1997 - Banking Law). It can not be ruled out that the bank secret will overlap with other professional secrets (lawyer's legal counsel, to which legal advisors are required to pay for the bank or brokerage secret), but also with state secrets.

Exclusion of the obligation to maintain banking secrecy

According to art. 104 pairs 2 PrBank the obligation to maintain bank secrecy does not apply to cases in which:

• it is necessary in the process of performance of the contract under which the given banking activity is performed,
• disclosure of information subject to bank secrecy to entrepreneurs or foreign enterprises to whom the bank entrusted the performance of specific banking activities;
• the bank provides information to advocates or legal counsels in connection with the legal assistance they provide,
• it is necessary to conclude and execute contracts for the sale of receivables classified as lost (sale of receivables by assignment to a debt collection agency),
• it is necessary to conclude and execute contracts for securitization of receivables.

Authorized entities

In cases provided for by law (Article 105 para. 1 PrBank), the bank has not only the right, and even the obligation to provide information protected by bank secrecy, including:

• other banks and credit institutions to the extent necessary for, for example, granting loans, loans, sureties and bank guarantees,
• other banks and credit institutions to the extent necessary for e.g. preparation of consolidated financial statements, risk management or statistical purposes,
• Polish Financial Supervision Authority in the field of supervision over banks,
• at the request of the President of the Supreme Audit Office, the president of the management board of the Bank Guarantee Fund, the Inspector General for Personal Data and the president of the Office for Competition and Consumer Protection within their statutory competences,
• at the request of a court, prosecutor, head of the Customs Service or the General Inspector of Fiscal Control in connection with a criminal, penal and fiscal case, maintenance, pension or division of joint property of the spouses against the account holder, as well as inheritance proceedings,
• an auditor authorized to audit the bank's financial statements,
• To the National Bank of Poland in relation, among others, to exercising control and collecting data necessary to prepare the balance of payments,
• Police and state protection services to the extent provided by law and other entities listed in art. 105 PrBank.

Examples of Bank secrecy

• The confidentiality of client information is the most important example of banking secrecy. Banks are not allowed to disclose any information about a customer's account, including information about deposits, withdrawals, and other transactions.
• Banks must also protect confidential information about a customer’s credit history and scores. This includes any information about a customer’s credit worthiness, past or current credit applications, and credit reports.
• Banks are also required to keep confidential any information related to a customer’s identity, such as name, address, social security number, and other identifying information.
• Banks must also maintain the confidentiality of any information related to a customer’s financial situation, such as income, investments, or other assets.
• Banks are also obligated to protect confidential information related to the bank itself, including its internal processes, policies, and procedures.
• Banks must also protect confidential information about its employees, such as salaries, bonuses, and other compensation.
• Banks must also protect confidential information about its vendors and partners, such as contracts and other agreements.

Advantages of Bank secrecy

The use of bank secrecy has a number of advantages for both the customer and the bank. These include:

• Increased trust between customers and banks - Bank secrecy helps to ensure that customers feel safe and secure when dealing with a bank, as they are confident that their financial information is not being shared with anyone else. This in turn helps to build customer loyalty and trust in the bank.
• Improved security - Bank secrecy prevents criminals from accessing customer information and using it for fraudulent purposes. This helps to protect both customers and the bank from financial loss.
• Improved customer service - Banks are able to provide more personalized services to their customers, as they are not required to disclose customer information. This helps to ensure that customers receive the best possible service from the bank.
• Greater privacy - Bank secrecy helps to protect customer privacy, as customer information is not shared with third parties. This helps to ensure that customers can manage their finances without fear of their information being exposed or used without their consent.

Limitations of Bank secrecy

Banking secrecy is subject to certain limitations:

• The bank must disclose information to authorized agencies, including the Financial Supervision Authority, the Financial Intelligence Service, the Police, the Prosecutor's Office, the Tax Office and the Customs Service, based on a court decision or request from a competent state authority, if there is a suspicion of involvement in money laundering, terrorist financing or other criminal activity.
• Banks are required to cooperate with the Bank Guarantee Fund, which is responsible for reimbursing deposits of customers of a bank in the event of its insolvency.
• Furthermore, the bank may provide information to other banks, in order to verify the identity of the customer or to confirm the transactions or financial relations with him.
• In addition, banks are required to provide information to the Central Statistical Office, the National Bank of Poland, the European Central Bank and other institutions authorized by law.
• Banks may also disclose information to the court or other public authorities in the course of legal proceedings, in accordance with the law.
• The bank may provide information to its auditors, attorneys and other persons authorized to provide professional services.
• The bank is also obliged to provide information to its customers, if they request it in writing.

Other approaches related to Bank secrecy

To further protect banking secrecy, there are several other approaches that banks can take. They include:

• Implementing strict internal policies and procedures that limit access to confidential information - Banks can protect their customers' confidential information by implementing internal policies and procedures that limit access to such information only to authorized personnel. This can prevent unauthorized personnel from accessing confidential information, and ensure that only those who are properly trained and vetted have access to such information.
• Conducting regular security audits - By regularly conducting security audits, banks can identify any potential vulnerabilities and take steps to address them before they become an issue. This can help protect customer information from being leaked or stolen by malicious actors.
• Encrypting data - Banks can also protect their customers' confidential information by encrypting the data. This prevents unauthorized access to the data and makes it much more difficult for malicious actors to gain access.
• Implementing two-factor authentication - Banks can also protect their customers' confidential information by implementing two-factor authentication. This requires users to provide two pieces of information, such as a password and a one-time code, before they can access the data. This makes it much harder for malicious actors to gain access to the data.

In summary, banks can take several approaches to protect their customers' confidential information, such as implementing internal policies and procedures, conducting regular security audits, encrypting data, and implementing two-factor authentication. By taking these steps, banks can ensure that their customers' confidential information is secure.

Bank secrecy — recommended articles

Nominee shareholding — Nominee shareholder — Fidelity guarantee — Mandatory disclosure — Fiscal Agent — Binding contract — Bridge Bank — Employee personal data — Consumer loan

References

• Johannesen, N., & Zucman, G. (2014). The end of bank secrecy? An evaluation of the G20 tax haven crackdown. American Economic Journal: Economic Policy, 6(1), 65-91.
• Council, F. F. I. E. (2005). Bank Secrecy Act anti-money laundering examination manual. Federal Financial Institutions Examination Council.
• Lewis, K. K. (1991). Why doesn't society minimize central bank secrecy?. Economic inquiry, 29(3), 403-415.