The Bank secret protects the confidentiality of clients’ information from third parties and includes all types of personal and economic information, including deposits, account numbers and transactions; without a doubt it isn’t to be confused with professional secrecy that regulates the discretion of banks and financial negotiators without the same level of protection.
The bank secret reigns fundamentally in extraterritorial or offshore banks almost always located in tax havens, protected by special laws that concede greater freedom to their clients in their operations, in addition to a more favorable tax treatment, on the basis of attracting deposits and investments from non-resident people or businesses, and which are not available for citizens of the country.
Extraterritorial or offshore banks are protected by law or even by the constitution, as is the case in Switzerland, which has set severe fines or prison for any bank employee that violates the bank secret of their clients. Even though the Tax Administrations have direct access to said information, which remains under the custody of the bank itself and its corresponding financial regulation organisms or central banks, and is revealed only through judicial order.
Some time ago, the Organization for Economic Cooperation and Development (OECD) and the G20 adopted measures to force extraterritorial or offshore banks and tax havens to relax the bank secret in cases of tax evasion crimes. To this effect, some jurisdictions were revealed as applying “harmful fiscal practices” proposing sanctions for not offering fiscal transparency.
Among other things, the famous “gray list” of tax havens and extraterritorial or offshore banks came into being, basically descending from the earlier “black lists” that gathered together the countries that didn’t seriously battle money laundering. They signed treaties such as the Mutual Legal Assistance Treaties, especially with the United States and Great Britain; and after the terrorist attacks of September 11, 2001, policies and norms against money laundering, known as Anti-Money Laundering policies were formed.
In the majority of the cases, we aren’t dealing with automatically revealing data or lifting the bank secret, which allows massive requests about accounts from a determined country, also known as “fishing trips”. On the contrary, most of the agreements demand that in order to make use of a fiscal information exchange clause, the account number, the name of the person to whom it belongs, or who is thought to be the beneficiary must be indicated; in addition, they must provide proof that a fiscal crime has been committed and show that the requested information cannot be obtained in any other way.