The Right to Financial Privacy in an Era of Mandatory Duties of Disclosure

Abstract

The article deals with bank secrecy and the customer's right to financial privacy from a constitutional point of view. It contends that despite the great importance of the right to financial privacy, various interests may override it and justify a mandatory disclosure of information. The article proposes a formula for balancing the right with conflicting interests, and for determining situations in which the duty of disclosure should prevail.

For this purpose, the article analyses three mandatory reporting duties: In the domestic arena - the reporting duty under the anti-money laundering regime; in the international arena – the duty to report to foreign tax authorities the accounts of customers with foreign citizenship; and in the commercial arena - the reporting duty under the credit data sharing regime.

The Israeli law, under which the right to financial privacy is considered a constitutional right, is used in the article as a case study.

Keywords: bank secrecy, financial privacy, anti-money laundering, FATCA, credit data, bank-customer relationship

JEL Classification: K14, K23, K33, K34