Responding to Challenges to a Bank's Duty of Confidentiality in Offshore Finance Centres: The Vanuatu Example
Banking and Finance Law Review, 28 2: 249-268
Posted: 19 Jun 2015
Date Written: 2013
Under the common law, a duty of confidentiality arises from the express or implied terms of the banker-customer relationship. However, banks in offshore financial centres are facing increasing demands from government authorities, such as tax offices, investigating tax evasion; and police, investigating offences such as money laundering, to disclose account information. In some cases, these demands have come from overseas authorities. Whether the demand comes for a domestic or foreign authority, these demands pose a threat to “the inviolability of secrecy and confidentiality”. This paper examines this problem in the context of Vanuatu, a tax haven in the South West Pacific. The paper commences with some brief background on Vanuatu and then gives an explanation of the sources of law in Vanuatu, which constitute a complex mixture of common law, civil law and indigenous law (known locally as “Customary Law” or “Kastom”). It then sets out the current legal position in Vanuatu regarding a banker’s duty of confidentiality, including a discussion of relevant legislation. The paper explores the exceptions to the duty and analyses the approach of the courts in Vanuatu, with reference to decisions in other common law countries, including England and Wales and Australia. It goes on to discuss the competing arguments for and against compulsory disclosure and considers whether the Vanuatu regime offers any solutions for other small islands states.
JEL Classification: k00
Suggested Citation: Suggested Citation