Banking secrecy law in Lebanon

It is the most important
issue in the Lebanese economic status.

On September 3, 1956 the Lebanese secrecy law was promulgated. The sought target from issuing the said law was to attract foreign capitals to Lebanon.

By virtue of this law, it is not permitted to reveal the banking dealing’s secrecy to a third person, and this is shown in article 2 of banking secrecy law.

This because this law is set for the welfare of the clients’ interest and foreign investor in Lebanon, and not for the public system’s interest.

Regarding this banking secrecy law, the controllers of the central bank have no right to oblige the bank’s directors to reveal the names of their client. Banks can organize their accounts in a way that does not reveal clients’ name.

While Article 151 of Money and Credit Code obliged every person who worked for the Central Bank to maintain the secret set by the law 03/09/1956.

This obligation includes all the information and facts concerning the clients of the Central Bank, all banks and financial institutions. This obligation applies to all data he acquires by virtue of his employment at the Central Bank.

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 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 the major features: its nature, its subjects, its prohibition, its exemptions and the sanctions imposed in case of its violation.

  • The Nature of the Banking Secrecy.

The Lebanese Secrecy Law did not create secrecy as a privilege to be enjoyed by bank 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.

  • 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)
  • 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.

  • Exemptions to the Prohibition.

Information concerning names of clients, their funds and related matters may be revealed in case of:

  1. A written permission by the concerned client of 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
  • Sanction of 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.