Professional secrecy and confidentiality in the context of financial crime

Abstract

The notions of confidentiality and professional secrecy are considered to be a fundamental pillar of a thriving financial services centre as they establish certain boundaries for the protection of personal data and professional secrets. Yet in our search for the causes and solutions to financial crime (which in recent years has grown to become more complex and sophisticated) we find many exponents who are of the view that confidentiality is one of the greatest problems in countering such wrongdoing. There is thus a conflict between the protection of confidential information and the disclosure of the same information for the purpose of investigations of suspected crimes. This dissertation seeks to analyse this debate in light of recent developments which have asked some serious questions of the current level of confidentiality attributed to financial services. Chapter one defines financial crime and charters its evolution throughout history whilst also shedding light on the impact that such crimes have on society at large. Various forms of financial crimes are discussed in detail and are illustrated through legislation and case law. The dissertation then moves on to discuss the concepts of confidentiality and professional secrecy in financial services. Such a definition is expressed through both legal theory and various statutory instruments. Financial crime and confidentiality are then linked in Chapter three which examines the interplay between the two notions. This interplay is demonstrated through a number of cases and practical examples. A pattern begins to emerge from such an analysis as a number of cases deal with jurisdictions which subscribe to excessive secrecy laws that go beyond the limitations found in common theory. However, due to the increase in cross-border financial services, such excessive secrecy jurisdictions began to directly contribute to the facilitation of illicit activity throughout the global economy. This thus led to a major international transparency effort which has had an impact on the level of secrecy that may be attributed to a financial jurisdiction, with a number of new disclosure requirements now in place. Chapter four analyses these standards and primarily focuses on four pillars: anti-money laundering legislation, tax information exchange, international judicial cooperation and corporate transparency. It is also stressed that such measures also contain a number of confidentiality safeguards which ensure that the information which is gathered by such authorities is only used for the purpose of which it was collected. These privacy safeguards are discussed in detail in order to differentiate between abusive secrecy practices and legitimate confidentiality. The final chapter of this dissertation concludes that although recent international efforts have significantly curbed excessive secrecy laws there still remain a number of avenues for abuse which will need to be tackled in future legislation. Furthermore, the chapter also stresses that despite current and future calls for even more instances of disclosure, it is crucial that the financial services sector continues to draw a fine line between abusive secrecy laws and legitimate confidentiality.