As usual a government minister shoots his mouth off and stirs a major controversy over the release of details of private accounts by banks. The issue at stake is whether a local bank violated the secrecy laws in divulging information about the accounts of the Chief Justice Shirani Bandaranayake. Were details of the chief justice’s [...]

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The Sundaytimes Sri Lanka

Banking secrecy and you

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As usual a government minister shoots his mouth off and stirs a major controversy over the release of details of private accounts by banks.

The issue at stake is whether a local bank violated the secrecy laws in divulging information about the accounts of the Chief Justice Shirani Bandaranayake.

Were details of the chief justice’s accounts in banks – eight cases relating to accounts with the National Development Bank (NDB) – disclosed with the client’s permission or under what provision of what law?

Governance campaigner Chandra Jayaratne, who has also filed a fundamental rights petition in the Supreme Court challenging the impeachment of the Chief Justice, fired a letter to the Sri Lanka’s Banks Association seeking answers as to whether a member bank had released personal details of a bank client (chief justice); whether it was done directly or indirectly; and whether the client’s permission was secured prior to the release of the information.

He has expressed concern that the banks’ secrecy code and other provisions pertaining to the confidentiality of a client’s personal accounts have been violated in this process.

Concern largely rests on two publicly known facts: details of these accounts contained in the impeachment motion submitted by 117 members of parliament and subsequently published in sections of the media. This is even before the Parliamentary Select Committee (PSC) probe began. Whether the PSC has the rights and privileges of a court of law (which then gives it authority to call for such information from a bank) is another matter and now being debated in court.

Banking secrecy laws are governed by Section 30 of the Central Bank’s Banking Act of 1988. It says that every director, manager, officer or other person of a licensed commercial bank or licensed specialised bank ‘shall observe strict secrecy in respect of all transactions of the bank, its customers and the state of accounts of any person’. The exception however is when such information is requested by a court of law and/or requested to be furnished (to another party) by the person/bank customer. There are others in the banking sector who believe that such information could furnished in the public interest, a debatable issue (and needs to be resolved by a court of law), but may apply only in the case of criminal offences.

There is also provision under anti-money laundering and anti-terrorism laws for such information to be released to state agencies such as the case of the accounts of the Wanni-based Tamil Rehabilitation Organisation (TRO), widely said to have been a front for the LTTE.

While, as pointed out, there are laws that govern the flow of information of bank accounts of private individuals, another major concern is the flippant way in which government politicians deal with issues which are of an extremely sensitive nature.According to reporters covering a recent media briefing on the impeachment, several PSC members in a casual and an offhand manner said it’s not difficult to get confidential details of bank accounts.

Once again whether details of the CJ’s accounts were released by the bank based on legal advice of an interpretation of the Banking Act or not, remains to be seen and would some-day be known to the public. Some other banks however refused to divulge this information as it didn’t come from a court of law or the Central Bank (which is also legally entitled to such information).

However across the world banking secrecy laws are becoming unpopular against the swirl of money laundering, terrorism financing and other unscrupulous ways to acquire wealth and beat the tax and criminal systems. Tax havens like Switzerland and the Cayman Islands for example are used by many to stash ill-gotten cash.

In an exclusive report in July this year, the Sunday Times revealed that Sri Lankan individuals, companies or the Sri Lankan government had more than 85 million Swiss francs (CHF) in secret Swiss accounts in 2011.

However the manner in which details of the accounts of the chief justice were obtained and made public raises many questions for ordinary citizens, as pointed out by Chandra Jayaratne, about their rights on the confidentiality of bank accounts.

Another worrying issue (in a wider context) is that more and more people’s privacy is at risk – whether its bank details, telephones, Customs, Immigration, Registrar of Persons or other agencies dealing with the public. Landlines or mobile phones of those whom the authorities feel are ‘a threat to national security’, are for example tapped by secretive state agencies. ‘National security” can be interpreted ‘as you like it’ by the authorities.

And the casual way in which government MPs deal with these issues and boast that any details of a citizen can be obtained raises more concerns as to whether ‘big brother’ is watching all the time.

This is not at all a pleasant thought and infringes on the rights of people as ensured by the Constitution. Further more such flippancy of serious issues should not be tolerated at any level, least of all by the country’s leaders.




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