Financial Crime World

Bank Secrecy Laws and Exceptions in the United Arab Emirates

The United Arab Emirates (UAE) has recently strengthened its bank secrecy laws and exceptions through two key pieces of legislation: Federal Decree-Law 14 of 2018, concerning the central bank and the organization of financial institutions and activities, and Federal Decree-Law 20 of 2018, concerning anti-money laundering and anti-terrorism financing.

Enhanced Protection for Confidential Information

The New Banking Law (Article 120) and the New AML Law have together improved the existing framework for confidentiality in the UAE. Customer confidentiality is now enshrined on statutory footing, with all data and information concerning accounts, deposits, and safe deposit boxes considered confidential and not to be disclosed directly or indirectly to any third party without prior written consent from the customer.

Obligation of Confidentiality

The obligation to keep such data and information confidential continues indefinitely, even after the termination of the relationship between the account holder and the bank or financial institution. Additionally, Article 120(4) stipulates that the obligation of confidentiality extends to all “agencies” and “persons,” as well as other entities with access to such information due to their profession or employment.

Exception to Confidentiality

The New AML Law contains an exception to the obligation of a bank or financial institution to hold customer information confidential. Article 15 requires banks and financial institutions to notify the designated unit within the Central Bank in cases where they have reasonable grounds to suspect a transaction or funds concerns a crime.

Balancing Confidentiality and Disclosure Obligations

The obligations of confidentiality under the New Banking Law and the New AML Law may raise questions about how banks will balance their obligations of confidentiality against their obligations of disclosure. The New AML Law also provides indirect recognition of the fact that lawyers owe a duty to their clients to treat information received from such clients as confidential, exempting them from the requirements of disclosure contained in Article 15 of the New AML Law.

Conclusion

Despite pending further guidance, these legislative developments highlight the importance of confidentiality for businesses that receive and deal with confidential information. Businesses in the UAE would be well advised to take note of these developments and stay alert for further updates in this field.

Key Points

  • The New Banking Law and the New AML Law have strengthened bank secrecy laws and exceptions in the UAE.
  • Customer confidentiality is now enshrined on statutory footing, with all data and information concerning accounts considered confidential.
  • The obligation to keep such data and information confidential continues indefinitely, even after the termination of the relationship between the account holder and the bank or financial institution.
  • Banks and financial institutions are required to notify the designated unit within the Central Bank in cases where they have reasonable grounds to suspect a transaction or funds concerns a crime.
  • Lawyers owe a duty to their clients to treat information received from such clients as confidential, exempting them from the requirements of disclosure contained in Article 15 of the New AML Law.