A critical study of the bank secrecy rule

Abstract

It has been a world-wide norm that in cases dealing with a bank customer’s information, particularly public figures, third parties always tend to request from banks to reveal the banking details of their customers. This is often the case when a bank has, in its discretion, terminated one of its customers’ bank account as a result of that customer’s illicit and illegal activities that have the adverse effect of harming the banks’ reputation and good name. Another example is where a tax notice has been served on a bank to make available the information of one of its customers that is under tax investigations, or where the National Prosecuting Authority orders a bank to disclose the information of its customer that is under criminal investigations. Criminal investigations and termination of bank accounts held by public figures always make news headlines, and it is such media coverage that tend to create the impression that a bank customer’s information can be disclosed to third parties. The bank secrecy rule dictates that a bank customer’s personal details and business activities must be kept secure and confidential at all times. The bank secrecy rule applies before, during and after the termination of a bank customer relationship. The protection that stems from the bank secrecy rule will always depend on the facts and merits of each case. The bank secrecy rule is not absolute. There are common law and statutory exceptions to the bank secrecy rule. There are circumstances where a bank can justifiably disclose its customer’s information to third parties, such as when the bank is compelled by law to disclose, and also where there is a public duty to disclose, where it is in the interest of the bank to disclose or the customer consents to the disclosure of their information. This study will embark on an analytical and critical study of the crux of the bank secrecy rule, the origin of the rule, its rationale and significance, its current position on the South African legal shelves, the interconnectedness of the bank secrecy rule with contract law, the nexus between the bank secrecy rule and the constitutional right to privacy, the legislative basis for the bank secrecy rule and lastly the answer as to whether the bank secrecy rule is absolute.