Bank secrecy in Germany is a secondary contractual obligation in the context of the business relationship between the customer and the bank. It is composed of:
- The obligation of the bank not to disclose the information it has in the course of business relations with customers.
- The Bank’s right to refuse to disclose customer information to third parties.
Benefits for both parties
Ultimately, it offers both contracting parties advantages: On the one hand, the customer benefits from discretion. He has it all in his own hands, which information is passed on to whom. On the other hand, banks thereby preserve their autonomy with regard to their business. They do not have to disclose their business relationships with customers.
Legal regulation of banking secrecy
The bank secrecy is due to the customary law of bank customers introduced in 1619 on the secrecy of their financial institution. In addition, Frederick the Great, the investigation of assets in 1756 under penalty. However, these silence vows and prohibitions in the present lack an explicit legal regulation.
This makes bank secrecy vulnerable on many sides: it has no validity in criminal proceedings. Alone in civil proceedings, it can preempt a statement. In addition, it is being undermined by a number of statutory exceptions.
However, Article 2 of the Basic Law grants the right to informational self-determination. This also protects privacy, including your own assets. Banks and governments alike must abide by this law.
Anchoring in the terms and conditions of the credit institutions
Bank secrecy is recorded in the general terms and conditions of the credit institutions. It states that they do not provide any amount of information on account balances, savings or other assets of their customers.
Likewise, the loan amount of any borrower is kept confidential. If you conclude a loan after a credit comparison, bank secrecy will also come into effect. The information of private individuals may only be provided with explicit consent.
For information about companies, however, there is a general permission. Corresponding companies, legal entities and merchants registered in the commercial register must therefore explicitly prohibit information.
Special case locker?
In the case of inheritance, bank secrecy is largely repealed. According to § 33 ErbStG, the credit institute is subject to a reporting obligation to the tax office in the event of the death of a customer, inter alia, in the following assets:
- Bank balance
- Securities accounts
- savings contracts
- life insurance
Notification obligation does not apply to the content
However, the obligation to notify applies only to lockers themselves and not to their content. So if you had rented a safe deposit box, the tax office only receives notification of its existence. Further information on the content of the subject can then be made solely by the heirs in the context of the inheritance tax return.
Breakthroughs of banking secrecy
Despite the contractual regulation of bank secrecy and its stipulation in the terms and conditions of the credit institutions, it is suspended by any breakthroughs. As already explained, all account connections become transparent in the event of death.
In addition, statutory disclosure requirements apply in the following cases:
|Legal basis||Seeking authority||background|
|Criminal Procedure Code (§ 161a StPO)||Prosecutor, investigating judge and court||Criminal trial initial suspicion|
|Tax Code (§ 30a and 93 AO)||Tax office||Tax criminal proceedings, bus money proceedings for tax offenses|
|Banking Act (§§ 44 ff. KWG)||Federal Central Office on Taxes||Automated retrievability for regulatory and law enforcement agencies|
|Money Laundering Act (§ 2 GwG)||Authorities with a concrete initial suspicion||Initial suspicion of arms trafficking, terrorism and tax evasion|
|Bundesausbildungsförderungsgesetz (§ 41 Abs. 4 BAföG)||BAföG office||Examination of the information provided by the applicant|
|Law for the promotion of tax honesty||employment exchange||Examination of the information provided by the applicant|
|SCHUFA clause||bureaus||Transfer of bank data with the permission of the customer|
While the SCHUFA clause is set out in the terms and conditions of the credit institutions, banks must also provide information to authorities on the assets of clients, provided they receive public funds, social benefits or basic security.
Other information obligations are linked to a suspicion: If supervisory, financial or law enforcement authorities suspect tax evasion or other illegal transactions, the data of bank customers can be disclosed. However, there must be specific indications for this.
Customer information about requests for information
If a request for information has been received by the bank and has been answered, the bank can inform the affected customer about this. However, this is not mandatory. So the behavior can vary from bank to bank. In addition, credit institutions are required to inform the customer of the request for information only after consultation with the investigating authority.
Bank secrecy in civil proceedings
Unlike criminal cases, civil proceedings do not entail any obligation to provide information. Here, the right to refuse to give evidence applies, whereby bank secrecy is still covered. According to the Code of Civil Procedure, witnesses are entitled to refuse their testimony if their content is covered by the trade secret (§ 383 (1) No. 6 and § 384 No. 3 ZPO).
Bank information on customer data would in this sense violate the General Business Relations of the credit institution. Finally, information can only be provided if the customer gives his consent and exempts the bank or the bank employee from maintaining bank secrecy.
Special status in Switzerland
Switzerland attaches great importance to banking secrecy. As a kind of fundamental right to financial privacy, unlike Germany, it is legally enshrined. Accordingly, a bank employee can be prosecuted here for breach of banking secrecy.
Historical origin and development
Its origin is the strict Swiss banking secrecy in the turmoil of the First World War and in the post-war period. The countries involved in the war were in a state of destabilization at that time. The financial markets were lastingly shaken by the world economic crisis of 1929, which consequently raised taxes sharply.
By contrast, because Switzerland had not participated militarily in the war, it possessed a comparatively stable political system and a mild tax system. Foreign citizens, therefore, tried to outsource their money to Switzerland.
However, after uncovering organized tax evasion from France to Switzerland, it unsettled many investors. In order to restore confidence, banking secrecy was eventually upgraded to a federal law in 1934.
In the following years, Switzerland was able to record solid growth. During the Second World War, its position on the international financial markets was further strengthened. Since then Switzerland has been regarded as a refuge for international capital. Until today, legally secured bank secrecy forms the basis for the flourishing financial economy.
Distinction between tax fraud and tax evasion
Unlike many other countries, Switzerland distinguishes between tax fraud and tax evasion. The latter is classified as a capital offense in Germany. In Switzerland, however, this is merely an administrative offense. An erroneous statement of assets and income is punished as a breach of law only with penalties, penalties and after taxes.
A tax fraud, on the other hand, occurs only when documents, such as business books, have been forged. Some foreign private clients can take advantage of the well-kept banking secrecy and invest their money untiringly with Swiss banks. Affected countries complain of serious tax losses stemming from the distinction between tax evasion and tax fraud.
Bank secrecy adé
However, EU finance ministers have reached an agreement in 2015 that seals the end of banking secrecy – at least for EU citizens. According to this, from 2018 all EU member states are to receive annual information on the accounts and assets of citizens holding accounts in Switzerland. Overall, the following data is transparent to account holders:
- tax number
- Date of birth
- Balances, interest and dividend income
The EU and Switzerland thus follow the international standard of the Organization for Economic Cooperation and Development (OECD) and the G20 Group. This is intended to significantly reduce tax fraud. Finally, with the entry into force of the agreement, tax fraudsters will also be exposed, who had their money so far unnoticed in Switzerland.
Currently, all 28 EU member states and Switzerland are involved. In addition, other countries are to follow with Andorra, Liechtenstein, Monaco and San Marino. At present, similar agreements are being negotiated with these states.