Oh this coveted topic. So misunderstood. So misrepresented.
Yes, banking secrecy still exists. No, it’s never going to go away.
What is banking secrecy?
Banking secrecy is by no means a Swiss invention, although the Swiss are no doubt the most famous.
The banking system is based on trust;trust that the bank will give you your money when you demand it and trust that your money will be kept safe from thieves. It also became a way for wealthy men (as it were at the time) to keep creditors, collectors, and curious relatives, friends, and acquaintances unaware of the true magnitude of the wealth. This is something the Swiss capitalized on when they enacted their banking secrecy legislation, formalized in 1934.
Banking secrecy is, thus, a means by which to keep one’s funds confidential from unauthorized persons.
Banking secrecy against whom?
This is the big question. Banking secrecy against curious people in general is protected in every nation that has a banking system. In no country can you walk into a bank and ask to whom a bank account belongs and receive a truthful answer without a law being broken. There are examples from countries with no tradition of strict banking secrecy, where people have walked into a bank with an account number and, using some social engineering, later leaving the bank knowing the name of the person on the account. Rural banks in Sweden, Norway, UK, and France are some of the worst when it comes to this.
Banking secrecy to prevent authorities from knowing the beneficiary of a bank account is not a simple matter. Following major international incidents in the early 2000s, the availability of this degree of banking secrecy has decreased.
It also depends on what authorities are asking for the information. Disclosure of information for tax purposes is often more restricted than disclosure of information for under suspicion of terrorism, trafficking, large-scale drug smuggling, and other serious crimes.
The Future of Banking Secrecy
Banking secrecy as a layer of privacy between your finances and private individuals is not going anywhere. There will always be jurisdictions that keep your finances safe even from creditors or non-criminal legal disputes.
What is changing is the degree to which one can expect secrecy against government authorities. With automatic exchange of information (AEOI) becoming the norm over the coming years or decades, banking secrecy is likely to erode even further. Not all countries will comply with AEOI, either by choice or because they cannot due to more pressing matters taking precedence (civil war, clean water supply, et cetera). Countries that choose to not comply may suffer poor international reputation and relations, though.
Banking Secrecy Jurisdictions
Since this is what you really came here for, below is a list of jurisdictions where banking secrecy can be considered strict:
- Cayman Islands
- Hong Kong
- Isle of Man
- Malaysia (including Labuan)
- Nauru (no banks operate there anymore)
- United Arab Emirates (Dubai, Abu Dhabi, et cetera)
- Many former Soviet countries – often referred to as the Commonwealth of Independent States (CIS) nations, such as the aforementioned Latvia and Moldova – have strict banking secrecy or have an effectively strong banking secrecy due to not cooperating with foreign nations on disclosure of information.
Some jurisdiction have different (stricter) banking secrecy legislation for international banks, which are banks licensed under a separate regime from domestic banks. International banks can usually do business with residents of that jurisdictions. International Banking Acts are common in the Caribbean and South Pacific.
This list is by no means complete and may be updated from time to time.
Note that the degree of banking secrecy greatly depends on where you live and if there are any special agreements (TIEA, DTA, or other) between your country of residence and the banking jurisdiction are you interested in.