BANKING secrecy is essential for the protection of customers dealing with banking institutions – it involves elements of personal data and the principle of confidentiality between a banker and a customer. Therefore, it is prohibited for any person who has access to the relevant information of the accounts of a customer to use such information for his own benefit.
The prohibition does not apply when the disclosure of the information is necessary for public interest purposes or for the protection of the interest of the banking institution or when the customer provides his written consent or he has been declared bankrupt or where the customer is a company under liquidation. The same applies when the bank institutes court proceedings against the customer or his guarantor in relation the customer’s account or when the information is given to the police or an authorised public.
Public interest, as mentioned in case law, supersedes the principle of banking secrecy and the confidential relation between bank and customer, when the disclosure of information or data is required in relation to fraudulent acts or criminal behaviours in both criminal and civil proceedings. Even though the issue is regulated in the aforesaid law, the Cyprus jurisprudence in a number of judgments of the Supreme Court, cases of Penderhill, Avila and Melouskia, states that the lifting of the banking secrecy for public interest purposes constitutes a principle of the Common Law which was introduced by the Cypriot legislator in the above law and therefore, the English case law on the issue is of great assistance.
Hence, it has been decided that the lifting of banking secrecy also applies in civil proceedings, since otherwise the victims of wrongdoings would be deprived of getting information from the banks how their assets were obtained from their bank accounts and where they ended up. Banking secrecy can be lifted through a court order known as Norwich Pharmacal and Banker’s Trust, provided the following prerequisites are met:
“(i) a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer;
(ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and
(iii) the person against whom the order is sought must:
(a) be mixed up in so as to have facilitated the wrongdoing; and
(b) be able or likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued.”
The issue of the order is under the discretionary power of the court, which will not satisfy the claim if the information can be obtained through another available manner or if it is not satisfi ed there is a real intention for an action to be filed against the wrongdoer. The lifting of the banking secrecy may be sought in case of a fraudulent transfer of property, which took place to deprive the judgment creditor from receiving the judgment debt.
In such a case, the court has the power to cancel such a fraudulent transfer of property or money and to order the reregistration of the property and the return of the money to the name of the debtor. While the procedure for the cancellation of such transfer is pending, the creditor may apply to the court and claim an order ordering the debtor and any banking institution to prepare, submit and serve to the creditor affidavits disclosing all the bank accounts of the debtor, either closed or active, their movement and all the documents submitted for their opening, transfers and withdrawals of money from them.