Bank Secrecy Products

Let’s look now at the bank secrecy and associated products which are offered by the offshore havens.

To define the nature of the services which are offered, it is important to understand the nature of bank secrecy. Whom are we keeping the secrets from? Who should have access to information about the account?

The basic requirement of bank secrecy is that account information—the name of the depositor and account transactions—must not be disclosed to third parties. Third parties include both external sources such as foreign governments and internal sources such as the domestic government. Bank policy and law must provide that no information concerning any account may be disclosed to any person other than the customer.

Some customers desire an additional level of privacy—wishing to remain anonymous from all bank employees except the one or two managers of the branch. For example, a well-known dictator would prefer that the employees of the bank not know who he is or what he is doing. Certainly, a greater risk is posed to the extent that the name of a depositor is known throughout the levels of bank employees.

Much of the necessary protection is afforded by the bank secrecy laws of the jurisdiction which make it unlawful to disclose any information concerning a depositor or an account. Some countries provide a narrow exception in the case of serious criminal offenses. Under these rules, the domestic government may obtain limited information in specified cases. Under all other circumstances, it is a crime to divulge any matter concerning an account.

All levels of employees are generally required to sign contracts imposing privacy restrictions, which continue even after employment is terminated. As a practical matter, these rules are taken seriously, and the disclosure exception for criminal matters has been applied in rare cases.