The Lebanese Banking Secrecy Law of 1956
On September 3, 1956, the Lebanese Secrecy Law was promulgated. This law has constituted a major achievement towards increasing confidence in the Lebanese banking system and encouraging foreign capital to choose Lebanon as a refuge. Moreover, it has been one of the major factors that have been contributing toward the growth of the banking sector in Lebanon, and making Lebanon a major financial and monetary center in the Middle East.
Because of the importance of this law, in the following we will highlight on its major features: its nature, its subjects, its prohibition, its exemptions and the sanctions imposed in case of its violation.
A. The Nature of the Banking Secrecy
The Lebanese Secrecy Law did not create secrecy as a privilege to be enjoyed by banks but as a duty banks must observe, not just for the benefit of the banking profession, but more specifically for the interest of the public and of those who deal with banks. This duty is imposed by the legislator who can enlarge or reduce its scope taking into consideration the interest of the general public and of the depositors.
By this law anonymity is secured, a code number deposit account can be opened for a client and a safe can be leased for a client.
B. Who is Subject to this Law?
1- All banks in operation in Lebanon, whether Lebanese or branches of foreign banks. (Art. 1)
2- Directors and employees of these banks, and any person who, by virtue of his job, has knowledge of any information concerning the bank’s books, transactions or correspondence. (Art. 2)
C. The Prohibition
All the persons referred to in Article 2 are prohibited from revealing any information concerning the names of clients, their funds and related matters to any person or authorities.
D. Exemptions to the Prohibition
Information concerning names of clients, their funds and related matters may be revealed in cases of:
1- A written permission by the concerned client or his heirs.
2- A person declared bankrupt.
3- A legal action between a bank and its client.
4- An exchange of information concerning indebted accounts between banks for reason of securing their investments.
5- Actions of illegal enrichment upon the request of the judicial authorities.
E. Sanctions for the Violation of the Banking Secrecy Law
1. Violation of banking secrecy is considered as a misdemeanor punished under the Criminal Code by three months to one year imprisonment.
2. A person charged for this violation is prohibited from performing the profession of a banker or being a bank’s employee. This prohibition applies to both intentional (in which case it is a criminal infraction) and unintentional (sanctioned under common law) violation of banking secrecy. It is permanent and does not stop in case of rehabilitation nor does it disappear by a lapse of time.