- Swiss Bank secrecy is primarily based on the contract between Bank and client and embraces absolutely all data, documents and sorts of relationships between Bank and client. Bank secrecy constitutes a right for the client and an obligation for the Bank.
- Another legal base for Bank secrecy is the protection of the personality, based on Article 28 of the Swiss Civil Code, which protects everyone's private sphere, to which Bank relations and account information belong.
- Article 47 of the Federal Law on Banks has reinforced the civil law protection of Bank secrecy. According to Article 47 Federal Law on Banks,
"1. Whoever divulges a secret entrusted to him or of which he has become aware in his capacity as officer, employee, mandatory, liquidator or commissioner of a Bank, as representative of the Banking Commission, officer or employee of a recognized auditing company and whoever tries to induce others to violate professional secrecy, shall be punished by imprisonment for not more than six months or by a fine of not more than CHF 50'000.00.
2. If the act has been committed by negligence, the penalty shall be a fine not exceeding CHF 30'000.00.
3. The violation of professional secrecy remains punishable even after termination of the official or employment relationship or the exercise of the profession.
4. Federal and cantonal regulations concerning the obligation to testify and to furnish information to a government authority shall apply."
The relationship between client and Bank is based on contract law which is a priority for the definition of banking secrecy and Article 47 of the Federal Law on Banks and Saving Banks is subsidiary to contractual banking secrecy.
In International matters, however, the penal aspect is the most important, as it is in relation with international judicial assistance in criminal matters.
Although Bank Secrecy is, as we have seen, safeguarded by different provisions of the law, federal and cantonal regulations on securing evidence in criminal cases take precedence.
The most important would be the federal law on International Judicial Assistance in Criminal Matters of March 20, 1981 as amended, allowing to grant specific assistance, such as supplying information and obtaining evidence also in cases of tax fraud, but not in political or military cases, nor in cases of fiscal evasion.
The federal law on International Judicial Assistance was revised on February 1, 1997. It is now specified that only a person or entity touched directly and personally by a judiciary assistance measure has a legitimate interest in having the measure modified or lifted (Article 21).
The consequences of this modification of the law is that only the client is entitled to act against a search of his accounts and Bank relations required by judicial assistance and not the Bank. This modification was brought into the law as Banks opposed the measure by all means going up to the Swiss federal court arguing that their obligation to hand over documents would undermine Swiss Bank secrecy and thus violate fundamental provisions of the Swiss legal system. Regularly though, the Swiss federal court has refused this argument as Banking secrecy does not have constitutional rank and may be lifted if other stronger interest requires it.
Other civil law provisions allow, under certain circumstances, to break through Bank secrecy.
One would be inheritance law, as each heir, representative of an heir, estate administrator and official liquidator have a right to gain information from the testator's Bank relation. This information right includes also account movements which have taken place before the acceptance of the last closing balance sheet by the testator. However, as long as the letters of administration have not been recognized by a Swiss Judge based on an executor’s procedure, the Bank will continue to hide behind Bank secrecy in order to justify their refusal to give out information or documents on testator’s accounts and Bank relationships.
The civil procedural laws also take precedence over Bank secrecy. They differ from canton to canton but in some of them, like for example Zurich, the judge decides whether a Bank officer has the right to refuse to give evidence or not.
In criminal procedural law, a Bank officer cannot refuse to give evidence and the Bank has also the obligation to hand over documents and objects related to the criminal case.
However, the Banks are bound to Bank secrecy by the contracts passed between them and their clients. Under this aspect, a violation of the contract might enable the client to claim for damages incurred by a violation of Bank secrecy not only under contract law, but also under the aspect of the protection of the personality, as Bank secrecy is a personal right of all Bank clients.
The Federal Law on money laundering of October 10, 1997, provides for various obligations of financial intermediaries (such as Banks) to prevent money laundering.
Under agreement on Swiss Banks' code of conduct with regard to exercise on due diligence convention of July 1, 1998, between Swiss Banker's Association and member Banks, signatory Banks undertake: (i) to verify identity of their contracting partners and, in case of doubt, to obtain from contracting partner a declaration divulging identity of beneficial owner of the assets entrusted to the Bank; (ii) not to provide any active assistance in flight of capital; and (iii) not to provide any active assistance in cases of tax evasion or similar acts by delivering incomplete or misleading information. This agreement does not however modify the Bank’s obligation to observe Bank secrecy but lays down rules of good conduct in Bank management.
Care should be exercised in relying upon the undermentioned article, as the relevant law may have changed since the date of the article. For further information please contact the author/firm