Closed doors, locked safes, sealed registers... The principle of banking secrecy seems impenetrable. However, secrecy is not absolute in France. The law provides for a number of situations in which this secrecy must give way, particularly in the face of certain public authorities acting in the public interest. Understanding these exceptions is essential for customers and financial institutions alike, as they define the limits of banking confidentiality. To avoid unpleasant surprises, take a look at the main exceptions concerning judicial and tax authorities.
The judiciary and banking secrecy
The conflict between banking secrecy and the needs of justice is a complex one. The law makes a clear distinction depending on whether the judicial authority is acting in a criminal or civil context.
As part of criminal proceedings
Banking secrecy largely yields to the judicial authority acting in criminal proceedings. Article L. 511-33 of the Monetary and Financial Code explicitly states that professional secrecy is not enforceable against "the judicial authority acting in the context of criminal proceedings". This exception is justified by the need to uncover the truth in cases that may seriously undermine public order.
Investigating officers (OPJs, APJs under their supervision, and even investigation assistants in certain specific cases) may access bank information covered by confidentiality. Article 60-1 of the Code of Criminal Procedure allows OPJs, during a flagrante delicto investigation, and article 77-1-1 for a preliminary investigation, to request by any means "from any person, establishment or private or public body" the handing over of documents relevant to the investigation, "including those from a computer system or nominative data processing", without being able to invoke the obligation of professional secrecy, unless there is a very restrictive legitimate reason.
In practical terms, an investigating officer can ask your bank for access to your account statements and details of your transactions, without the bank being able to invoke banking secrecy to refuse. This has long been confirmed by the Court of Cassation, notably in a ruling dated 27 April 1994: investigating officers acting on a requisition from the public prosecutor may not invoke banking secrecy. Requests may even relate to specific computer data (articles 57-1, 60-2, 76-3 and 77-1-2 of the Code of Criminal Procedure), subject to certain conditions relating to the seriousness of the offence or the nature of the data.
It is important to note that the bank that receives such a requisition must not inform its customer, on pain of violating the secrecy of the investigation (Cass. crim., 30 Jan. 2001) and exposing itself to the penalties of article 434-7-2 of the Criminal Code. The banker's liability may therefore be compromised by either improper communication or inappropriate information given to the customer who is the subject of the investigation.
Secrecy and the examining magistrate
The examining magistrate has extensive investigative powers to uncover the truth. Under article 99-3 of the Code of Criminal Procedure, he may order the disclosure of any bank documents necessary for his information, without being bound by secrecy.
It may also order the seizure of documents, or even the seizure of bank accounts themselves. Article 706-154 of the Code of Criminal Procedure provides for the special seizure of sums of money held in accounts, even without the prior authorisation of a judge, in certain urgent cases, subject to subsequent review by the judge. In a ruling handed down on 3 February 2021, the Criminal Division of the Court of Cassation ruled that this precautionary seizure of sums held in a deposit account "does not entail any dispossession of the funds, which it merely renders unavailable" and respects fundamental rights. The Agency for the Management and Recovery of Seized and Confiscated Assets (AGRASC) plays a central role in the management of these assets.
Limits in civil proceedings
In civil and commercial matters, the principle is reversed. As a general rule, professional secrecy constitutes a "legitimate impediment" that can be set up against a civil judge (Cass. 1re civ., 21 July 1987).
This means that a bank may refuse to disclose information about a customer to a third party, even at the request of a civil court. Case law confirms this, notably in a ruling by the Commercial Chamber on 13 June 1995. The banker may only disclose documents relating to the account with the express consent of the customer.
However, there are important exceptions to this principle:
- Where the bank is a party to the proceedings : Secrecy is waived if disclosure of the information is necessary for the bank's own defence or for the resolution of the dispute (Cass. com., 19 June 1990). However, even as a party, the bank may not reveal confidential information of interest to a third party to the proceedings (Cass. com. 13 Nov. 2003).
- The "right to evidence" : Recent case law, influenced by the European Court of Human Rights, tends to give precedence to the right to evidence over banking secrecy in certain situations. The Court of Cassation considers that secrecy does not constitute a legitimate impediment when "the claim is directed against the institution not in its capacity as a confidential third party but as a party to the proceedings brought against it with a view to seeking its possible liability" (Cass. com., 29 November 2017). It is then necessary to determine whether the production of documents is essential to the exercise of the right to evidence and proportionate to the interests at stake (Cass. com., 15 May 2019). This development makes the boundary more porous and requires a case-by-case analysis. In the event of banking secrecy litigation, a lawyer can help you assess the situation.
Tax authorities and banking secrecy
The tax authorities are undoubtedly the authorities with the most extensive exemptions from banking secrecy, justified by the constitutional objective of combating tax fraud.
The tax authorities' right of access
The tax authorities have a very broad right of disclosure, defined mainly in articles L. 81 to L. 96 of the French Tax Procedures Code (LPF). This right enables it to obtain a wide range of documents and information from credit institutions on simple request and without prior judicial authorisation.
Articles L. 83 and L. 85 of the LPF are particularly important: they require institutions subject to control by the administrative authority (including banks) and taxpayers themselves to provide service documents and accounting records. The administration can thus obtain information on accounts opened, transactions carried out, documents relating to safe-deposit boxes, and copies of cheques or transfer orders. Visit details of tax communication rights is complex and deserves special attention.
Refusal to provide these documents is severely punished under article 1734 of the French General Tax Code: the fine is €10,000 per request, and a further fine of €1,500 per document (capped at €50,000) may be imposed in the event of opposition to the taking of a copy.
FICOBA and mandatory declarations
In addition to the right of disclosure, banks have a number of systematic reporting obligations that feed into the tax authorities' databases:
- Declaration of account openings and closures (FICOBA) : Article 1649 A of the General Tax Code (CGI) requires banks and similar bodies to declare to the tax authorities the opening and closing of all deposit accounts, as well as the rental of safes. This information is fed into the FICOBA bank account database, which can be consulted by various authorities (judicial, tax, customs, social security, TRACFIN, etc.).
- Declaration of assets of deceased customers : Article 806 of the General Tax Code requires custodians of funds (including banks) to declare to the tax authorities, within fifteen days of payment or delivery, any securities, sums or valuables relating to an open estate of which they are aware.
- Declaration of securities transactions : Financial intermediaries must file an annual summary return (Imprimé Fiscal Unique - IFU) of their customers' securities transactions and income from transferable securities (article 242 ter of the CGI).
- Declaration of transfers of funds abroad : Article L. 152-3 of the French Monetary and Financial Code requires institutions to inform the tax authorities and customs authorities, at their request, of the date, amount, identification of the originator and beneficiary, and account references of any transfers of funds made abroad by French residents. The EVAFISC file records this information.
Right of inspection and seizure (tax searches)
In cases of suspected serious tax fraud, the tax authorities have a right of inspection and seizure, governed by article L. 16 B of the Book of Tax Procedures. This procedure, which is more intrusive than the simple right of communication, is similar to a search and requires the prior authorisation of the liberty and custody judge.
During such a visit, which must take place in the presence of a judicial police officer, tax agents may examine all documents (including bank documents) and take copies. Banking secrecy cannot be invoked during these operations. If the tax authorities discover the existence of a bank safe-deposit box during their visit, they may, with the additional authorisation of the judge, proceed immediately to visit the safe-deposit box. Appeals against the order and the conduct of the operations have been strengthened to guarantee taxpayers' rights.
International tax cooperation and FATCA
The international exchange of tax information has considerably reduced the scope of banking secrecy. The US Foreign Account Tax Compliance Act (FATCA), passed in 2010, requires foreign financial institutions, including French banks, to provide the US tax authorities (IRS) with information about accounts held by US citizens or residents ('US Persons').
To enable these exchanges without violating French banking secrecy, France and the United States signed an intergovernmental agreement (Model 1 IGA) on 14 November 2013. Under this agreement, French banks report the required information to the French tax authorities, which then automatically transmit it to the IRS. Article 1649 AC of the General Tax Code governs this collection and transmission of information.
At the same time, the OECD has developed a Common Reporting Standard (CRS), implemented within the European Union by Directive 2014/107/EU (known as "DAC 2"), which provides for the automatic exchange of information on financial accounts between the tax administrations of participating countries. These mechanisms cover a wide range of information (account balances, various types of financial income, etc.).
The principle of banking secrecy is therefore gradually being eroded under the effect of this enhanced international cooperation. The Court of Justice of the European Union has confirmed that Member States can no longer invoke banking secrecy to refuse the exchange of tax information required by European directives. Banking secrecy, already open to national authorities, is now widely open to foreign tax authorities.
Le banking secrecy is also lifted for TRACFIN as part of the fight against money laundering.
Faced with these numerous exceptions, it is essential to know your rights. A lawyer can help you to check the legality of requests for information from the judicial or tax authorities and challenge any excesses or procedural irregularities. For an in-depth analysis of your situation and tailored advice, contact our team of lawyers.
Sources
- Monetary and Financial Code, articles L. 511-33, L. 152-3, L. 561-15
- Code of Criminal Procedure, articles 60-1, 60-2, 77-1-1, 77-1-2, 99-3, 706-154
- French Tax Code (LPF), articles L. 16 B, L. 81 to L. 96, L. 135 X
- General Tax Code (CGI), articles 242 ter, 806, 1649 A, 1649 AC, 1734
- Criminal Code, article 434-7-2
- FATCA Agreement between France and the United States of 14 November 2013
- Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU (Administrative cooperation for tax purposes)
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