The joint parliamentary committees are currently discussing the draft law amending banking secrecy. The version approved by the government is under review and modification in Parliament. This amendment — referred from the government to Parliament by Decree No. 103 — is the second in just three years. In 2022, the banking secrecy law was amended in response to IMF requirements. At that time, secrecy was lifted for anyone involved in public affairs, from the President of the Republic to civil servants in categories one through four.
The current government of Nawaf Salam has approved further amendments to this law. As part of the reasoning for amending Article 7, it was stated that “the current law has created ambiguity in interpreting the text. The intention may have been to restrict the Central Bank and the Banking Control Commission’s authority to request information protected by banking secrecy solely within the context of bank restructuring.” Ultimately, the government adopted the proposal of the head of the Banking Control Commission dated September 22, 2024, to amend Article 150 of the Code of Money and Credit — with retroactive effect.
An analysis of the proposed amendments reveals their core lies in Article 7. This article requires banks to provide information on their clients — including names, account details, and other related data — to those tasked with auditing the bank’s accounts. This is unjustified, as there is no link between a bank’s accounts and its clients. These two sets of accounts must not be confused. Auditing a bank’s accounts does not require auditing its clients’ accounts.
The proposed amendment aims to allow the parties mentioned in paragraph (e)—namely, the Central Bank, the Banking Control Commission, and any auditing entity — to obtain general information on bank clients, including their names, under the pretext of restructuring and oversight. However, this justification fails for two main reasons:
- All bank restructuring draft laws already contain a specific provision allowing the lifting of banking secrecy for that purpose. There is therefore no need to include this justification in the current amendment, which is a general text applied to a specific case — restructuring — especially since the restructuring law itself will contain the same provision in a more appropriate form.
- As for the justification related to oversight, it also does not hold. The current law already enables the Central Bank and the Banking Control Commission to obtain all necessary information to exercise oversight over specific clients, including their names. General oversight does not usually require revealing clients’ identities — unless the real goal is not oversight, but rather fishing for private information for purposes other than those originally intended.
What makes matters worse is that the draft law allows for the retroactive lifting of banking secrecy for unspecified groups of bank clients — potentially all of them.
Retroactive application of laws typically threatens both legislative and social stability — ironically cited in the very preamble of this draft law. When it comes to banking secrecy, it also threatens individuals’ private and personal lives, contrary to the global trend where most countries have enacted laws to protect personal data — including Lebanon through Law No. 81/2018.
The draft also opens the door for new legal pursuits based on actions previously tolerated by lawmakers. For instance, lifting secrecy retroactively could expose clients to prosecution for things like past tax violations related to bank accounts (especially inheritance tax), which the draft law now brings to light — placing clients at risk.
Retroactivity also threatens economic security, sending a dangerous message: individuals should not trust Lebanese laws that grant them rights today, as Parliament may later adopt retroactive legislation that endangers those previously acquired rights. Lebanon has historically been a safe haven for the persecuted, particularly from Arab countries, attracting their funds under the promise of banking secrecy — and now they face the shock of having their accounts unveiled. Notably, Lebanon is the only country in the world to explicitly legislate for the retroactive lifting of banking secrecy.
Even if this lifting of secrecy remains limited to the Central Bank and the Banking Control Commission, it must come with a clear commitment that they will not share any information with any other authority, under any circumstances. They must uphold the principle of banking secrecy concerning the obtained data, with strict penalties for any breach — as occurred recently when information handed to a judge was leaked the next day on social media by individuals close to him.
The law attempts to mitigate the negative consequences of retroactivity by allowing affected parties to object before an emergency judge. However, it fails to specify the criteria or rules that the Central Bank and the Banking Control Commission must follow — making it hard for the judge to properly evaluate how the law is applied.
Such criteria should include principles like:
- Legitimacy of purpose: Any general decision to lift secrecy must be justified by public interest, clearly stated in the decision, and subject to judicial verification under penalty of annulment.
- Proportionality: The goal must justify the means, and secrecy should only be lifted to the extent necessary to serve the public interest. For example, names of clients should not be disclosed for political retaliation or information fishing if the objective can be achieved otherwise. Proportionality also requires limiting access to those who truly need the information, preventing unnecessary sharing — contrary to the draft’s current wording.
Finally, since the draft limits retroactive effect to the Central Bank and the Banking Control Commission, the final article of the banking secrecy law should be amended as follows:
"This law shall come into force upon its publication in the Official Gazette, taking into account the retroactive effect stipulated in Article 7(e), as amended."
Comments