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Malaysian Banking Law – Banking Secrecy under the Financial Services Act 2013 (Sections 132–134 FSA 2013)
Introduction
Banking secrecy is one of the most fundamental duties owed by a bank to its customer. The duty requires a bank to keep confidential all information relating to a customer’s affairs and accounts. This obligation promotes public confidence in the banking system and protects customers’ privacy.
In Malaysia, banking secrecy is governed principally by sections 132, 133 and 134 of the Financial Services Act 2013 (FSA 2013). These provisions impose a statutory duty of confidentiality on banks and their officers while simultaneously providing specific exceptions where disclosure is legally permitted.
The duty extends beyond account balances and transactions. It covers all information obtained by the bank through the banker-customer relationship, whether obtained directly from the account records or through other dealings with the customer.
1. Restriction on Inquiry into Customer Affairs (Section 132 FSA 2013)
General Rule
Section 132 provides that neither the Finance Minister nor Bank Negara Malaysia (BNM) may arbitrarily inquire into the affairs or accounts of a particular customer.
The purpose of this provision is to safeguard customer privacy and prevent unnecessary governmental interference in banking relationships.
Exception
BNM may investigate a customer’s account where such inquiry is necessary for exercising its statutory powers under:
Case Scenario 1: BNM Investigation
Facts
ABC Bank suspects that one of its customers is involved in large-scale money laundering activities.
BNM commences an investigation and requires the bank to provide account records and transaction details of the customer.
The customer argues that his banking information is confidential and cannot be disclosed.
Solution
The customer’s argument fails.
Under section 132(2), BNM is expressly empowered to inquire into a customer’s affairs when exercising its regulatory and supervisory functions.
The bank may therefore disclose the information to BNM without violating banking secrecy obligations.
Critical Analysis
Banking secrecy is not absolute.
The law balances two competing interests:
2. Statutory Duty of Secrecy (Section 133 FSA 2013)
General Rule
Section 133(1) imposes a strict duty of secrecy on:
The obligation continues even after employment or office has ended.
Scope of Protection
The duty covers:
Criminal Liability
A person who unlawfully discloses customer information commits an offence.
Penalty:
Exceptions under Section 133(2)
The secrecy obligation does not apply where:
(a) Disclosure to BNM
Information is disclosed to BNM for the exercise of its statutory functions.
(b) Statistical or Aggregated Information
Information is presented in summary form without identifying individual customers.
Example:
A bank publishes:
“Our bank has 100,000 savings account holders.”
No individual customer can be identified.
(c) Public Information
Information already lawfully available to the public from another source.
Example:
A listed company publicly discloses its banking arrangements in its annual report.
Case Scenario 2: Employee Reveals Customer Information
Facts
A bank officer discovers that a famous celebrity has RM20 million in her account.
The officer informs several friends about the celebrity’s financial position.
The information later spreads on social media.
Solution
The officer has breached section 133(1).
The disclosure concerns confidential customer information obtained through employment with the bank.
The officer may face criminal prosecution and disciplinary action.
Critical Analysis
The statutory duty protects public confidence in banks.
If bank employees could freely disclose customer information, customers would lose trust in the banking system and may hesitate to conduct financial transactions through banks.
3. Prohibition Against Further Disclosure (Section 133(3))
Section 133(3) extends the protection even further.
A person who knows that information was obtained through an unlawful disclosure cannot further disclose that information.
This prevents confidential information from continuing to circulate after the original breach.
Case Scenario 3: Secondary Disclosure
Facts
A bank employee unlawfully gives customer information to a journalist.
The journalist knows that the information was leaked illegally.
The journalist publishes the customer’s account details.
Solution
The journalist may also fall within section 133(3) because he knowingly disclosed information that had been unlawfully obtained.
Critical Analysis
The law seeks to stop both:
4. Permitted Disclosures (Section 134 FSA 2013)
Although secrecy is the general rule, section 134 creates exceptions.
A bank may disclose customer information:
The 18 Permitted Disclosures under Schedule 11
1. Customer Consent
Disclosure is permitted where the customer gives written consent.
Case Scenario
A customer applies for a housing loan from another bank and signs a consent form authorising disclosure of his account information.
Solution
The disclosure is lawful because the customer expressly consented.
Critical Analysis
Customer autonomy justifies disclosure.
The right to privacy belongs to the customer and may therefore be waived by the customer.
2. Administration of Deceased Customer’s Estate
Disclosure is permitted for:
A deceased customer’s son seeks information regarding his father’s bank accounts for probate proceedings.
Solution
The bank may disclose the relevant information.
3. Bankruptcy or Winding-Up Proceedings
Disclosure is permitted where a customer becomes bankrupt or a company is wound up.
Case Scenario
A bankruptcy trustee requests details of the bankrupt’s bank accounts.
Solution
The bank may disclose the information.
Critical Analysis
The trustee must identify and recover assets for creditors.
The public interest outweighs confidentiality concerns.
4. Civil or Criminal Proceedings Involving the Bank
Disclosure is allowed in litigation involving:
A customer sues a bank for wrongly dishonouring a cheque.
Solution
The bank may disclose account records necessary to defend itself.
Critical Analysis
A bank must be able to protect its legal rights.
Without this exception, the bank would be unable to defend litigation effectively.
5. Garnishee Orders
Banks may disclose information when complying with garnishee proceedings.
Case Scenario
A judgment creditor obtains a garnishee order against a customer’s account.
Solution
The bank may reveal account information necessary to comply with the court order.
6. Court Orders
Disclosure is permitted where ordered by a court not lower than the Sessions Court.
Case Scenario
The High Court orders a bank to produce account statements during litigation.
Solution
The bank must comply.
Critical Analysis
The administration of justice requires access to relevant evidence.
7. Requests by Enforcement Agencies
Disclosure may be made to enforcement agencies investigating offences.
Case Scenario
The Malaysian Anti-Corruption Commission (MACC) requests account records during a corruption investigation.
Solution
The bank may lawfully disclose the information.
8–18 Other Permitted Disclosures
Disclosure is also allowed for:
Confidentiality During Court Proceedings
Under section 134(5), courts may:
Critical Analysis
These provisions preserve confidentiality even after disclosure becomes necessary in litigation.
The objective is to disclose only what is necessary while minimising harm to customer privacy.
Jeyamary Case (Bank Officer Disclosure)
Facts
A bank officer printed a customer’s account particulars and gave them to a friend who was a private investigator.
The information was later passed to a blogger.
Decision
The bank officer was convicted and sentenced to:
Banking secrecy extends beyond account balances and transactions.
It includes all confidential information acquired through the banking relationship.
Critical Analysis
The case demonstrates that even seemingly minor disclosures can attract criminal liability because public confidence in the banking system depends upon strict confidentiality.
Johari and Rafizi Case (National Feedlot Corporation)
Facts
A bank clerk disclosed confidential banking information concerning the National Feedlot Corporation (NFC) to politician Rafizi Ramli.
Both individuals were initially convicted and sentenced to 30 months’ imprisonment.
They were subsequently acquitted.
Legal Principle
The case highlights the tension between:
Although public accountability is important, banking information cannot ordinarily be disclosed outside the statutory exceptions provided by law. The case illustrates the sensitivity of customer banking information and the legal consequences that may arise from unauthorised disclosure.
Key Examination Principles
Section 132
Contains 18 specific situations where disclosure is lawful, including:
Conclusion
Under Malaysian Banking Law, the default position is strict confidentiality of customer information. Sections 132–134 of the FSA 2013 create a comprehensive statutory framework that protects customer privacy while allowing disclosure where required by law, regulation, judicial process, or public interest considerations. The legislation carefully balances individual confidentiality rights against the needs of law enforcement, financial regulation, taxation, insolvency administration, and the administration of justice. Cases such as Jeyamary and the NFC controversy demonstrate that unauthorised disclosure can carry serious legal consequences and that banking secrecy remains a cornerstone of the Malaysian banking system.
Introduction
Banking secrecy is one of the most fundamental duties owed by a bank to its customer. The duty requires a bank to keep confidential all information relating to a customer’s affairs and accounts. This obligation promotes public confidence in the banking system and protects customers’ privacy.
In Malaysia, banking secrecy is governed principally by sections 132, 133 and 134 of the Financial Services Act 2013 (FSA 2013). These provisions impose a statutory duty of confidentiality on banks and their officers while simultaneously providing specific exceptions where disclosure is legally permitted.
The duty extends beyond account balances and transactions. It covers all information obtained by the bank through the banker-customer relationship, whether obtained directly from the account records or through other dealings with the customer.
1. Restriction on Inquiry into Customer Affairs (Section 132 FSA 2013)
General Rule
Section 132 provides that neither the Finance Minister nor Bank Negara Malaysia (BNM) may arbitrarily inquire into the affairs or accounts of a particular customer.
The purpose of this provision is to safeguard customer privacy and prevent unnecessary governmental interference in banking relationships.
Exception
BNM may investigate a customer’s account where such inquiry is necessary for exercising its statutory powers under:
- The Financial Services Act 2013;
- The Islamic Financial Services Act 2013; or
- Section 47 of the Central Bank of Malaysia Act 2009.
Case Scenario 1: BNM Investigation
Facts
ABC Bank suspects that one of its customers is involved in large-scale money laundering activities.
BNM commences an investigation and requires the bank to provide account records and transaction details of the customer.
The customer argues that his banking information is confidential and cannot be disclosed.
Solution
The customer’s argument fails.
Under section 132(2), BNM is expressly empowered to inquire into a customer’s affairs when exercising its regulatory and supervisory functions.
The bank may therefore disclose the information to BNM without violating banking secrecy obligations.
Critical Analysis
Banking secrecy is not absolute.
The law balances two competing interests:
- Customer privacy; and
- Public interest in preventing financial crimes.
2. Statutory Duty of Secrecy (Section 133 FSA 2013)
General Rule
Section 133(1) imposes a strict duty of secrecy on:
- Financial institutions;
- Directors;
- Officers;
- Employees;
- Agents; and
- Former directors, officers or agents.
The obligation continues even after employment or office has ended.
Scope of Protection
The duty covers:
- Account balances;
- Transaction records;
- Loan facilities;
- Fixed deposits;
- Customer identities;
- Financial standing;
- Credit information;
- Information obtained through banking dealings.
Criminal Liability
A person who unlawfully discloses customer information commits an offence.
Penalty:
- Imprisonment up to 5 years;
- Fine up to RM10 million; or
- Both.
Exceptions under Section 133(2)
The secrecy obligation does not apply where:
(a) Disclosure to BNM
Information is disclosed to BNM for the exercise of its statutory functions.
(b) Statistical or Aggregated Information
Information is presented in summary form without identifying individual customers.
Example:
A bank publishes:
“Our bank has 100,000 savings account holders.”
No individual customer can be identified.
(c) Public Information
Information already lawfully available to the public from another source.
Example:
A listed company publicly discloses its banking arrangements in its annual report.
Case Scenario 2: Employee Reveals Customer Information
Facts
A bank officer discovers that a famous celebrity has RM20 million in her account.
The officer informs several friends about the celebrity’s financial position.
The information later spreads on social media.
Solution
The officer has breached section 133(1).
The disclosure concerns confidential customer information obtained through employment with the bank.
The officer may face criminal prosecution and disciplinary action.
Critical Analysis
The statutory duty protects public confidence in banks.
If bank employees could freely disclose customer information, customers would lose trust in the banking system and may hesitate to conduct financial transactions through banks.
3. Prohibition Against Further Disclosure (Section 133(3))
Section 133(3) extends the protection even further.
A person who knows that information was obtained through an unlawful disclosure cannot further disclose that information.
This prevents confidential information from continuing to circulate after the original breach.
Case Scenario 3: Secondary Disclosure
Facts
A bank employee unlawfully gives customer information to a journalist.
The journalist knows that the information was leaked illegally.
The journalist publishes the customer’s account details.
Solution
The journalist may also fall within section 133(3) because he knowingly disclosed information that had been unlawfully obtained.
Critical Analysis
The law seeks to stop both:
- The initial leak; and
- Subsequent dissemination.
4. Permitted Disclosures (Section 134 FSA 2013)
Although secrecy is the general rule, section 134 creates exceptions.
A bank may disclose customer information:
- Under Schedule 11; or
- With written approval from BNM.
The 18 Permitted Disclosures under Schedule 11
1. Customer Consent
Disclosure is permitted where the customer gives written consent.
Case Scenario
A customer applies for a housing loan from another bank and signs a consent form authorising disclosure of his account information.
Solution
The disclosure is lawful because the customer expressly consented.
Critical Analysis
Customer autonomy justifies disclosure.
The right to privacy belongs to the customer and may therefore be waived by the customer.
2. Administration of Deceased Customer’s Estate
Disclosure is permitted for:
- Faraid certificates;
- Probate applications;
- Letters of administration;
- Distribution orders.
A deceased customer’s son seeks information regarding his father’s bank accounts for probate proceedings.
Solution
The bank may disclose the relevant information.
3. Bankruptcy or Winding-Up Proceedings
Disclosure is permitted where a customer becomes bankrupt or a company is wound up.
Case Scenario
A bankruptcy trustee requests details of the bankrupt’s bank accounts.
Solution
The bank may disclose the information.
Critical Analysis
The trustee must identify and recover assets for creditors.
The public interest outweighs confidentiality concerns.
4. Civil or Criminal Proceedings Involving the Bank
Disclosure is allowed in litigation involving:
- The bank and its customer;
- Guarantors;
- Sureties;
- Competing claimants.
A customer sues a bank for wrongly dishonouring a cheque.
Solution
The bank may disclose account records necessary to defend itself.
Critical Analysis
A bank must be able to protect its legal rights.
Without this exception, the bank would be unable to defend litigation effectively.
5. Garnishee Orders
Banks may disclose information when complying with garnishee proceedings.
Case Scenario
A judgment creditor obtains a garnishee order against a customer’s account.
Solution
The bank may reveal account information necessary to comply with the court order.
6. Court Orders
Disclosure is permitted where ordered by a court not lower than the Sessions Court.
Case Scenario
The High Court orders a bank to produce account statements during litigation.
Solution
The bank must comply.
Critical Analysis
The administration of justice requires access to relevant evidence.
7. Requests by Enforcement Agencies
Disclosure may be made to enforcement agencies investigating offences.
Case Scenario
The Malaysian Anti-Corruption Commission (MACC) requests account records during a corruption investigation.
Solution
The bank may lawfully disclose the information.
8–18 Other Permitted Disclosures
Disclosure is also allowed for:
- Functions of the Malaysia Deposit Insurance Corporation (PIDM);
- Securities Commission investigations;
- Stock exchange functions;
- Trade repository functions;
- Inland Revenue Board tax investigations;
- Credit reporting agencies;
- Supervisory authorities;
- Centralised group functions (audit, risk management, IT);
- Mergers and acquisitions due diligence;
- Outsourcing arrangements;
- Consultants and adjusters;
- Suspicion of criminal offences.
Confidentiality During Court Proceedings
Under section 134(5), courts may:
- Conduct proceedings in camera (private hearings);
- Restrict disclosure of customer information;
- Make additional confidentiality orders.
Critical Analysis
These provisions preserve confidentiality even after disclosure becomes necessary in litigation.
The objective is to disclose only what is necessary while minimising harm to customer privacy.
Jeyamary Case (Bank Officer Disclosure)
Facts
A bank officer printed a customer’s account particulars and gave them to a friend who was a private investigator.
The information was later passed to a blogger.
Decision
The bank officer was convicted and sentenced to:
- Two days’ imprisonment; and
- RM20,000 fine.
Banking secrecy extends beyond account balances and transactions.
It includes all confidential information acquired through the banking relationship.
Critical Analysis
The case demonstrates that even seemingly minor disclosures can attract criminal liability because public confidence in the banking system depends upon strict confidentiality.
Johari and Rafizi Case (National Feedlot Corporation)
Facts
A bank clerk disclosed confidential banking information concerning the National Feedlot Corporation (NFC) to politician Rafizi Ramli.
Both individuals were initially convicted and sentenced to 30 months’ imprisonment.
They were subsequently acquitted.
Legal Principle
The case highlights the tension between:
- Banking confidentiality; and
- Public interest disclosures.
Although public accountability is important, banking information cannot ordinarily be disclosed outside the statutory exceptions provided by law. The case illustrates the sensitivity of customer banking information and the legal consequences that may arise from unauthorised disclosure.
Key Examination Principles
Section 132
- Protects customer accounts from arbitrary inquiry.
- Allows BNM investigations when exercising statutory powers.
- Imposes a statutory duty of secrecy.
- Applies to banks, directors, officers and agents.
- Covers all customer-related information.
- Continues after employment ends.
- Breach may result in imprisonment up to 5 years or a fine up to RM10 million.
- Provides exceptions to secrecy.
- Permits disclosure under Schedule 11.
- Permits disclosure with written approval from BNM.
Contains 18 specific situations where disclosure is lawful, including:
- Customer consent;
- Probate matters;
- Bankruptcy proceedings;
- Court orders;
- Enforcement investigations;
- Tax authorities;
- Credit reporting agencies;
- Outsourcing and group functions;
- Suspicion of criminal offences.
Conclusion
Under Malaysian Banking Law, the default position is strict confidentiality of customer information. Sections 132–134 of the FSA 2013 create a comprehensive statutory framework that protects customer privacy while allowing disclosure where required by law, regulation, judicial process, or public interest considerations. The legislation carefully balances individual confidentiality rights against the needs of law enforcement, financial regulation, taxation, insolvency administration, and the administration of justice. Cases such as Jeyamary and the NFC controversy demonstrate that unauthorised disclosure can carry serious legal consequences and that banking secrecy remains a cornerstone of the Malaysian banking system.
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