Compelled Waiver of Foreign Bank Secrecy for Discovery of Records Abroad

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There are many branches, agencies, and subsidiaries of foreign banks licensed to conduct banking business here in New York. These foreign-bank offices are often the targets of civil discovery requests seeking production of the bank’s records located in their headquarters or branches overseas. Many foreign countries have bank-secrecy and data-privacy laws that prohibit the disclosure of a customer’s banking information, including the customer’s identity. These laws often impose criminal penalties (such as fines and imprisonment) and administrative penalties (such as license revocation) for violations. Well-known examples of countries with such laws are Switzerland and the Cayman Islands.

If the bank is within the jurisdiction of a federal or state court, it may face conflicting demands from (1) U.S. law, which requires disclosure of customer information relevant to the action, and (2) the law of the bank’s home country, which prohibits disclosure. One way of avoiding such conflicts is through the customer’s written consent to disclosure, given either voluntarily or pursuant to court order.

Originally published in New York Law Journal on June 26, 2013.

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Topics:  Administrative Fines, Bank Secrecy Act, Corporate Criminal Fines, Corporate Records, Discovery, Foreign Banks, Foreign Corporations, Penalties, Privacy Laws, Waivers

Published In: Civil Procedure Updates, Conflict of Laws Updates, Finance & Banking Updates, International Trade Updates, Privacy Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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