BANK SECRECY IN CYPRUS

Banking is one of the most important sectors of the economy since it influences investment and consumption. Confidentiality is a cornerstone element of an effective and efficient bank system. In Cyprus, bank secrecy is regulated by section 29 (1) of the Banking Law (66 (I)/97).

According to the provisions of section 29(1), it is prohibited for any member of administrative and management body, chief executive, director, manager, officer and employee of a bank, who has access to the records of the bank with regards to the account of any individual customer of that bank, to give, divulge, reveal or use for his/her benefit any information concerning the account of this client.

Moreover, section 29 (1) clarifies that members of administrative and management body, chief executives, directors, managers, officers and employees of a bank are not allowed to reveal or use any information regarding the accounts of bank’s clients during their employment and after the termination of their employment relationship with the bank.

Nevertheless, following the paragraph 29(2) of Law 66(I)/97, bank secrecy does not apply to some particular cases. An outstanding example of lifting bank secrecy is for public interest reasons.

Precisely, the bank secrecy is revoked if :

a. the customer or his/her personal representatives gives or give his/her or their written consent for this particular purpose;

b. the customer is declared bankrupt or in case the customer is a company, the company is being wound up;

c. legal proceedings are instituted between the bank and the customer or his/her guarantor, regarding the customer's account;

d. the information is given to the police under the provisions of any law or to a public officer who is duly authorised under that law to access that information or to a court during the investigation process or prosecution of a criminal offence under any such law;

e. the bank has been served with a garnishee order attaching money to the account of the customer;

f. the information is required in the course of his/her duties by a colleague in the employment of the same bank or its holding company or the subsidiary of the bank or its holding company or an auditor or legal representative of the bank;

g. the information is required to assess the creditworthiness of a customer in connection with or relating to a bona fide commercial transaction or a prospective commercial transaction so long as the information required is of a general nature and is not related to the details of a customer's account;

h. the provision of the information is necessary for reasons of public interest or for the protection of the interests of the bank.

i. the provision of information facilitates the operation of subsections 41(3) and 41(4);

j. the information is given according to section 74 of the Covered Bond Law;

k. the information is provided to the Cooperative Central Bank by a Cooperative Credit Institution connected with it under the section 25A;

l. the information is provided to a system or data exchange mechanism of credit institutions under this Law and directives issued according to Article 41(6);

Confidentiality consists an essential element of the bank-customer relationship. Confidence and credibility are the bases of an effective and efficient banking system. Cyprus legal system protects bank secrecy through the provisions of the Banking Law. In addition to this, breach of bank secrecy and confidentiality lead to substantial penalties. Furthermore, the same level of confidentiality applies to the relationship between the Central Bank of Cyprus and banking institutions operating in the Republic of Cyprus.