As Singapore strives to be a leading financial centre in the region, banking secrecy laws have become increasingly important. Banking secrecy is what guarantees clients of banks that their information will be kept confidential and will not be passed on to private individuals or official bodies. In Singapore, this comes in the form of section 47 of the Banking Act ("the Act") which places banks under statutory obligations of secrecy in respect of customer account information. This obligation of confidentiality extends to officers in a bank, defined in section 2(1) of the Act to include a director, secretary, employee, receiver, manager and liquidator. Banks are allowed to disclose information about customers and their accounts only under narrowly described circumstances.

Banking secrecy was recently examined in the Court of Appeal case of Susilawati v American Express Bank Ltd [2009] 2 SLR(R) 737 ("Susilawati").

In Susilawati, the appellant was a customer of the respondent bank and executed a charge over all monies in her account to secure her son-in-law's liabilities to the bank. Monies were eventually deducted from the account as a result of her son-in-law's inability to discharge his liabilities. The appellant had her claims of undue influence and breach of fiduciary duty dismissed at the court of first instance and appealed, applying for the court to order a new trial raised by the appellant in the appeal, for leave to adduce further evidence and for leave to amend the pleadings.

The trial judge1 discussed the English Court of Appeal case of Tournier v National Provincial and Union Bank of England [1924] 1 KB 451 ("Tournier") which held that a banker was generally under an implied duty to keep the affairs of his customer confidential. This, however, was subject to four general exceptions. A bank could make a disclosure where: (a) the bank was compelled to do so by law, (b) it was in the public interest to disclose, (c) it was in the interests of the bank to disclose, or (d) the disclosure was made by the express or implied consent of the customer. In particular, the judge focused on the fourth common law exception mentioned in Tournier which allowed disclosure if a customer gave express or implied consent.

The Court of Appeal comments however were of much wider general application. While not expressly raised in the appeal, the Court felt it important to correct any impression that may have been given by the lower court that there was room for common law exceptions to a banker's duty to keep the affairs of a customer confidential.

In fact, the Court felt "compelled to address this issue to ensure that the position is free from doubt" by stating that "In light of the plain wording of section 47, our current statutory regime on banking secrecy leaves no room for the four general common law exceptions expounded in Tournier to coexist. They have been embraced within the framework of section 47 of the Banking Act, which is now the exclusive regime governing banking secrecy in Singapore. Section 47 makes it plain that no customer information shall be disclosed by a bank in Singapore or any of its officers except as expressly provided for in the Banking Act. A breach of any of the prescribed statutory obligations amounts to a criminal offence. The Third Schedule to the Banking Act sets out, in illuminating detail, the circumstances, conditions, and details of permissible disclosure. It is axiomatic that, in terms of details and scope, this is a more comprehensive regime than that articulated in Tournier. There is simply no room, in Singapore, for the less sophisticated and more general common law rules articulated in Tournier to have any further relevance save for the perspective of historical evolution and context it provides."

It is interesting to note that the Court of Appeal, including Chief Justice Chan Sek Keong, did not stop at the strict reading of section 47 but went on to clarify that it did not currently see any problems with our current statutory banking regime in relation to the particular issues identified by the trial judge. The trial judge had hoped that "in time to come, there would be amendments to the [Banking] Act or new legislation altogether to strike an appropriate and fair balance between the interests of confidentiality for banks and the protection of guarantors of banks' customers."

The Court of Appeal said, "There is, with respect, no peculiar lacuna in the law which presently necessitates the immediate attention of and intervention by the legislature."

Such an unequivocal endorsement of our current strict banking secrecy laws by the highest court is interesting to note when considered against the background of commentary and renewed criticism of the banking secrecy laws in Switzerland.

Switzerland, still for many a bastion of banking secrecy, has in the last year faced renewed pressure from the US, among others, to open its potential Pandora's box and expose errant tax evaders. Despite Switzerland announcing last year that they would give limited cooperation in international tax probes, the pressure continues to pile on this year from other countries such as Germany. This may be due to the international economic crisis with many Western powers scrambling to regain funds from tax evaders to finance their recovery packages.

While Singapore has been successful in positioning itself as a financial centre, particularly in Asia, and naturally a few comparisons have been made internationally between Switzerland's and our banking regimes, Switzerland with its much longer tradition as a tax haven still remains firmly the focus of governments.

As Switzerland continues to dig its heels in and in light of the expressed confidence of our Court of Appeal in our Banking Act, it appears that for the time being, our banking secrets will remain safe.

End note: 1 The March 2009 edition of the Rodyk Reporter published an article on the High Court decision of the Susilawati case called "Duty Of Confidentiality Versus Interests Of Third Party Security Providers".

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