Malaysian Banking Law – Banking Secrecy, Confidentiality, Personal Data Protection and Banker’s Duties
Introduction
Banking secrecy is one of the most fundamental obligations imposed upon banks and financial institutions. It protects confidential information entrusted by customers to banks and forms a cornerstone of the banker-customer relationship.
The duty serves several important purposes:

• Protecting customer privacy;
• Preserving confidence in the banking system;
• Promoting trust in financial institutions;
• Protecting sensitive commercial information; and
• Ensuring disclosure only where authorised by law.

In Malaysia, banking secrecy is governed primarily by:

• Section 132 Financial Services Act 2013 (FSA 2013) – Restriction on inquiry into customer affairs;
• Section 133 FSA 2013 – Statutory duty of secrecy;
• Section 134 FSA 2013 – Permitted disclosures and exceptions; and
• Personal Data Protection Act 2010 (PDPA) – Protection of personal data handled by commercial organisations, including banks.

These statutory duties are supplemented by:

• Contract law;
• Tort law;
• Equity; and
• Regulatory obligations.

As a result, a bank may incur:

• Criminal liability;
• Civil liability;
• Regulatory sanctions; and
• Equitable remedies

for improper disclosure or misuse of customer information.


PART I – STATUTORY FRAMEWORK UNDER THE FSA 2013
Section 132 FSA 2013 – Restriction on Inquiry into Customer Affairs
General Rule
Section 132 protects customers from arbitrary governmental interference.
Neither:

• The Minister of Finance; nor
• Bank Negara Malaysia (BNM)

may ordinarily direct an inquiry into the affairs or account of a particular customer.
The purpose is to safeguard banking privacy and prevent unjustified investigations.


Exception
BNM may inquire into customer affairs where necessary to exercise its statutory functions under:

• The Financial Services Act 2013;
• The Islamic Financial Services Act 2013; or
• The Central Bank of Malaysia Act 2009.

Thus, banking secrecy cannot be used to obstruct legitimate regulatory investigations.


Case Scenario
Facts
A customer receives several unexplained overseas transfers amounting to RM20 million.
BNM suspects money laundering and requests the customer’s account records from the bank.
The customer argues that disclosure breaches banking secrecy.
Solution
The argument fails.
Section 132(2) expressly permits BNM to obtain such information when exercising regulatory powers.
Critical Analysis
The provision balances:

• Customer privacy; and
• Financial system integrity.

Without such powers, regulators would be unable to investigate fraud, money laundering and terrorism financing.


Section 133 FSA 2013 – Statutory Duty of Secrecy
General Rule
Section 133 imposes a strict statutory duty of confidentiality upon:

• Banks;
• Financial institutions;
• Directors;
• Officers;
• Employees;
• Agents; and
• Former employees and agents.

No such person may disclose information relating to a customer’s affairs or account.
The obligation continues indefinitely, including after employment ends.


Scope of Protection
The duty covers:

• Savings accounts;
• Current accounts;
• Fixed deposits;
• Financing facilities;
• Investment accounts;
• Credit information;
• Transaction histories;
• Customer identities;
• Financial standing; and
• Any information acquired through the banker-customer relationship.

The protection extends beyond account balances and includes all information concerning the customer’s affairs.


Public Information Exception
The secrecy obligation does not apply where information:

• Has already become lawfully available to the public;
• Is disclosed to BNM for statutory purposes; or
• Is disclosed in anonymous or aggregated form.

Criminal Liability
A person who breaches section 133 commits an offence punishable by:

• Imprisonment up to 5 years;
• Fine up to RM10 million; or
• Both.

Further Disclosure Prohibited
Section 133(3) prohibits a person who knowingly receives unlawfully disclosed information from making any further disclosure.
Thus liability may extend beyond the original wrongdoer.


Section 134 FSA 2013 – Permitted Disclosures
Although secrecy is the general rule, section 134 recognises that confidentiality cannot be absolute.
A bank may disclose information:

• Under Schedule 11; or
• With written approval from BNM.

The 18 Permitted Disclosures under Schedule 11
1. Customer’s Written Consent
Disclosure authorised by the customer.
2. Deceased Customer’s Estate
Disclosure for probate, administration and faraid purposes.
3. Bankruptcy and Winding-Up
Disclosure involving bankrupt individuals and insolvent companies.
4. Litigation Involving the Bank
Disclosure in civil or criminal proceedings involving:

• Customers;
• Guarantors;
• Sureties; and
• Competing claimants.

5. Garnishee Orders
Disclosure necessary to comply with garnishee proceedings.
6. Court Orders
Disclosure pursuant to orders of courts not lower than the Sessions Court.
7. Enforcement Agencies
Disclosure for investigations conducted under written law.
8. PIDM
Disclosure for performance of statutory functions by PIDM.
9–10. Capital Market Authorities
Disclosure involving:

• Securities Commission;
• Stock exchanges;
• Clearing houses; and
• Trade repositories.

11. Inland Revenue Board
Disclosure for tax administration and international information exchange.
12. Credit Reporting Agencies
Disclosure to registered credit reporting agencies.
13. Supervisory Authorities
Disclosure to local and foreign regulators performing supervisory functions.
14. Centralised Group Functions
Disclosure for:

• Audit;
• Risk management;
• Compliance;
• Finance; and
• Information technology.

15. Due Diligence Exercises
Disclosure relating to:

• Mergers;
• Acquisitions;
• Capital raising; and
• Disposal of business assets.

16. Outsourcing Arrangements
Disclosure to outsourced service providers.
17. Consultants and Adjusters
Disclosure to professional advisers engaged by the bank.
18. Suspicion of Criminal Activity
Disclosure where the bank reasonably suspects that an offence has been, is being or may be committed.


Confidentiality During Court Proceedings
Even when disclosure is permitted, the court may:

• Conduct proceedings in camera;
• Restrict access to documents;
• Prohibit publication; and
• Make confidentiality orders.

The objective is to minimise unnecessary disclosure.


PART II – CONFIDENTIALITY UNDER CONTRACT AND EQUITY
Tan Eng Seong v Malayan Banking Bhd
Principle
Disclosure of customer information to the customer’s brother constituted a breach of the implied contractual duty of confidentiality.
Significance

• Confidentiality is an implied contractual term.
• Relatives remain third parties.
• Nominal damages may be awarded.

Wong Yeng Mun v CIMB Bank Berhad
Principle
The bank negligently sent account statements to the wrong address.
The statements were opened by the customer’s wife.
Significance

• Confidentiality belongs to the customer.
• Negligent disclosure may create liability.
• Banks must maintain proper safeguards.

Tan Lay Soon v Kam Mah Theatre Sdn Bhd
Principle
Confidentiality belongs to the customer.
Consent to disclosure may be:

• Express; or
• Implied.

Disclosure necessary to implement a customer-authorised transaction is lawful.


PART III – EXTRA-TERRITORIAL DISCLOSURE
Attorney General of Hong Kong v Zauyah Wan Chik
Principle
Banking secrecy legislation does not automatically operate outside Malaysia.
Disclosure compelled by foreign court proceedings may not create criminal liability in Malaysia.
Significance
The administration of justice may justify disclosure.


PART IV – ILLEGALLY OBTAINED INFORMATION
Wako Merchant Bank v Lim Lean Heng
Principle
Information obtained in breach of banking secrecy provisions remains admissible if relevant.
Significance
The law distinguishes between:

• Criminal liability for disclosure; and
• Admissibility of evidence.

The evidence remains admissible despite unlawful disclosure.


PART V – PUBLIC INFORMATION
Hj Salleh Hj Janan v Financial Information Services Sdn Bhd
Principle
Publicly available court records are not confidential.
Information published in:

• Court records;
• Newspapers; or
• The Gazette

may be restated without liability.
Significance
Banking secrecy protects confidential information, not information already in the public domain.


PART VI – BANKER’S PROFESSIONAL DUTY
Bank Utama (M) Bhd v Insan Budi Sdn Bhd
Facts
The plaintiff obtained an international trade facility to finance the importation and sale of raw sugar.
The plaintiff instructed the bank to issue a confirmed irrevocable transferable SWIFT Telegraphic Transfer.
The bank used the wrong transmission procedure and attempted to send the SWIFT instruction by facsimile.
As a result:

• The overseas bank could not process the transaction;
• The supplier terminated the contract;
• The downstream sale failed; and
• The plaintiff suffered losses.

The plaintiff sued for:

• Breach of contract; and
• Negligence.

Held
The Court of Appeal held the bank liable.
Principle 1 – Concurrent Liability
A professional adviser may be liable simultaneously:

• In contract; and
• In negligence.

Principle 2 – Duty to Advise
The bank possessed specialist knowledge regarding SWIFT procedures.
The customer could not reasonably be expected to understand technical banking processes.
The bank therefore had a duty to advise the customer that SWIFT transfers cannot be transmitted by facsimile.
Significance
Modern banks are not merely executors of instructions.
They are professional service providers expected to exercise reasonable care and expertise.


PART VII – BANKING SECRECY AND THE PERSONAL DATA PROTECTION ACT 2010 (PDPA)
Relationship Between Banking Secrecy and Personal Data Protection
Banking secrecy and personal data protection operate alongside one another.
While the FSA 2013 protects confidential banking information, the Personal Data Protection Act 2010 (PDPA) protects personal data handled by commercial organisations, including banks.
The PDPA makes it unlawful for commercial organisations to:

• Sell personal information;
• Misuse personal data; or
• Permit unauthorised third parties to access such information.

The legislation is particularly important in relation to:

• Retail banking customers;
• Consumer financing;
• Guarantors;
• Corporate borrowers; and
• Credit facilities.

Criminal Penalties under the PDPA
Depending on the nature of the offence, penalties may include:
Section 141(2)

• Fine up to RM100,000;
• Imprisonment up to 1 year; or
• Both.

Section 130(7)

• Fine up to RM500,000;
• Imprisonment up to 3 years; or
• Both.

Non-compliance with the data protection principles may constitute a criminal offence.


The Seven Personal Data Protection Principles
Banks must comply with seven statutory principles.


1. General Principle (Section 6)
Personal data must:

• Be processed lawfully;
• Be necessary for the intended purpose; and
• Generally be processed with the customer’s consent.

The information collected must also be adequate and not excessive.


2. Notice and Choice Principle (Section 7)
Customers must be informed:

• Why data is collected;
• How it will be used; and
• Their rights regarding the data.

Customers should be given choices regarding certain uses of their personal information.


3. Disclosure Principle (Section 8)
Personal data must not be disclosed without consent unless authorised by law.
This principle closely complements banking secrecy obligations under section 133 FSA 2013.


4. Security Principle (Section 9)
Banks must implement appropriate security measures to protect data.
Examples include:

• Password protection;
• Encryption;
• Secure databases;
• Restricted access systems; and
• Workplace security controls.

5. Retention Principle (Section 10)
Personal data must not be retained longer than necessary.
Once the purpose has been fulfilled, unnecessary data should be destroyed or anonymised.


6. Data Integrity Principle (Section 11)
Personal data must remain:

• Accurate;
• Complete;
• Current; and
• Up to date.

7. Access Principle (Section 12)
Customers must generally be allowed to:

• Access their personal data; and
• Request corrections where information is inaccurate.

Alliance Bank v AmBank Dispute (2018)
Facts
Alliance Bank commenced legal proceedings against AmBank alleging misappropriation of sensitive information.
The dispute involved former Alliance Bank employees who had joined AmBank.
Alliance Bank alleged that electronic records showed confidential internal information being transferred to a former employee after his departure.
The information allegedly reached senior personnel within the competing bank.
The dispute was subsequently resolved amicably.


Significance
The case illustrates that confidentiality obligations extend beyond customer information.
Banks must also protect:

• Internal business information;
• Commercial strategies;
• Trade secrets; and
• Sensitive operational data.

Chia Sun Huat v United Overseas Bank (Malaysia) Bhd
Facts
A purchaser agreed to buy property from a vendor whose property was charged to UOB.
To complete the purchase, the purchaser requested a redemption statement from UOB.
The vendor could not be contacted.
Although a purported letter of authority existed, the bank could not verify its authenticity.
UOB refused to release the redemption statement.
The purchaser sued.


Held
The High Court held that UOB was not liable.
The bank was bound by its duty of secrecy and could not release confidential information without proper authority.


Legal Principle
A bank is entitled to refuse disclosure where:

• Authority cannot be verified; and
• Disclosure would reveal confidential customer information.

The duty of secrecy prevails unless a recognised exception applies.


Comprehensive Case Scenario
Facts
A purchaser requests a redemption statement from a bank concerning a property owner who cannot be contacted.
The purchaser presents an unsigned authority letter and insists that the transaction cannot proceed without disclosure.
The bank refuses.
The purchaser alleges obstruction and negligence.


Solution
Applying Chia Sun Huat v UOB:
The bank is entitled to refuse disclosure.
The redemption statement contains confidential customer information.
Without verified authority or a statutory exception under section 134 FSA 2013, disclosure would breach banking secrecy.


Critical Analysis
The decision demonstrates the strict nature of banking confidentiality.
Commercial convenience cannot override a bank’s legal obligations.
Banks must verify authority before releasing customer information, even where refusal may delay a transaction.


Key Examination Principles
Section 132 FSA 2013

• Restricts arbitrary inquiries.
• Allows BNM investigations.

Section 133 FSA 2013

• Creates the statutory duty of secrecy.
• Covers all customer information.
• Continues after employment ends.
• Breach attracts criminal sanctions.

Section 134 FSA 2013

• Creates exceptions to secrecy.
• Contains 18 permitted disclosures.
• Allows disclosure with BNM approval.

PDPA 2010

• Protects personal data.
• Imposes seven statutory principles.
• Creates additional criminal liability for misuse of personal information.

Important Case Principles
Tan Eng Seong

• Confidentiality is an implied contractual duty.

Wong Yeng Mun

• Negligent disclosure creates liability.

Tan Lay Soon

• Confidentiality belongs to the customer.
• Consent may be implied.

Zauyah Wan Chik

• No automatic extra-territorial effect.

Wako Merchant Bank

• Illegally obtained evidence remains admissible.

Hj Salleh Hj Janan

• Public facts are not confidential.

Bank Utama

• Banks may be liable concurrently in contract and negligence.
• Professional duty may include a duty to advise.

Chia Sun Huat

• Banks may refuse disclosure where authority is uncertain.
• Confidentiality overrides commercial convenience.

Conclusion
Malaysian banking secrecy law is built upon a comprehensive framework comprising sections 132–134 FSA 2013, the Personal Data Protection Act 2010, contractual obligations, equitable principles and tortious duties. The law protects customer information not only from unauthorised disclosure but also from misuse, mishandling and improper processing. The various cases demonstrate that confidentiality belongs to the customer, extends beyond account balances to all customer affairs, survives termination of employment, and remains enforceable through criminal, civil and equitable remedies. At the same time, carefully defined statutory exceptions ensure that secrecy does not obstruct justice, regulatory supervision, legitimate commercial transactions or the public interest.

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Malaysian Banking Law – Banking Secrecy, Confidentiality and Banker’s Duties
Introduction
Banking secrecy is one of the most fundamental obligations in Malaysian banking law. It protects information relating to a customer’s affairs and account and forms an essential component of the banker-customer relationship.
The duty of confidentiality serves several important objectives:

• Protecting customer privacy;
• Preserving confidence in the banking system;
• Facilitating honest disclosure between banks and customers; and
• Ensuring that confidential information is disclosed only in circumstances recognised by law.

In Malaysia, banking secrecy is principally governed by:

• Section 132 Financial Services Act 2013 (FSA 2013) – Restriction on inquiry into customer affairs;
• Section 133 FSA 2013 – Statutory duty of secrecy; and
• Section 134 FSA 2013 – Permitted disclosures and exceptions to secrecy.

These statutory provisions are supplemented by contractual obligations, equitable principles and common law duties of care.


Part I – Statutory Framework
Section 132 FSA 2013 – Restriction on Inquiry into Customer Affairs
General Rule
Section 132 protects customers from arbitrary investigations into their banking affairs.
Neither:

• The Minister of Finance; nor
• Bank Negara Malaysia (BNM)

may ordinarily inquire specifically into the affairs or account of a particular customer.
The purpose is to ensure that customer information remains protected from unnecessary governmental intrusion.


Exception
BNM may inquire into a customer’s affairs where necessary for exercising its statutory functions under:

• The Financial Services Act 2013;
• The Islamic Financial Services Act 2013; or
• The Central Bank of Malaysia Act 2009.

Thus, confidentiality cannot be used to obstruct lawful regulatory investigations.


Case Scenario
Facts
A licensed bank reports suspicious money transfers involving one of its customers.
BNM commences an anti-money laundering investigation and requests account information.
The customer objects, claiming banking secrecy.
Solution
The objection fails.
Section 132(2) expressly authorises BNM to obtain such information for regulatory and supervisory purposes.
Principle
Banking secrecy protects privacy but does not prevent legitimate regulatory oversight.


Section 133 FSA 2013 – Duty of Secrecy
General Rule
Section 133 imposes a statutory duty of secrecy on:

• Financial institutions;
• Directors;
• Officers;
• Employees;
• Agents; and
• Former directors, officers and agents.

These persons must not disclose any information or document relating to a customer’s affairs or account.
The obligation continues even after employment or office ends.


Scope of Protection
The duty covers:

• Account balances;
• Transaction records;
• Loan facilities;
• Fixed deposits;
• Securities accounts;
• Credit information;
• Customer identities;
• Financial standing; and
• Any information acquired through the banking relationship.

Public Information Exception
The duty does not apply where information:

• Has already lawfully entered the public domain; or
• Is presented in statistical or aggregated form without identifying individual customers.

Criminal Liability
A breach of section 133 may result in:

• Imprisonment up to 5 years;
• Fine up to RM10 million; or
• Both.

Prohibition on Further Disclosure
A person who knowingly receives information disclosed in breach of section 133 is prohibited from further disseminating that information.


Section 134 FSA 2013 – Permitted Disclosures
Although secrecy is the general rule, section 134 recognises that confidentiality cannot be absolute.
A financial institution may disclose customer information:

• Under Schedule 11 FSA 2013; or
• With written approval from BNM.

The 18 Permitted Disclosures under Schedule 11
1. Customer’s Written Consent
Disclosure authorised by the customer.
2. Deceased Customer’s Estate
Disclosure for probate, letters of administration, faraid certificates and distribution orders.
3. Bankruptcy or Winding-Up
Disclosure involving bankrupt customers or companies under liquidation.
4. Civil and Criminal Proceedings
Disclosure where litigation involves:

• The bank and customer;
• Guarantors;
• Sureties; or
• Competing claimants.

5. Garnishee Orders
Disclosure necessary to comply with garnishee proceedings.
6. Court Orders
Disclosure pursuant to orders issued by courts not lower than the Sessions Court.
7. Enforcement Agencies
Disclosure for investigations conducted under written law.
8. PIDM Functions
Disclosure to facilitate functions of the Malaysia Deposit Insurance Corporation.
9–10. Capital Market Authorities
Disclosure involving:

• Securities Commission;
• Stock exchanges;
• Clearing houses; and
• Trade repositories.

11. Inland Revenue Board
Disclosure for taxation and information-exchange purposes.
12. Credit Reporting Agencies
Disclosure to registered credit reporting agencies.
13. Supervisory Authorities
Disclosure to regulatory authorities performing functions similar to BNM.
14. Centralised Group Functions
Disclosure for:

• Audit;
• Risk management;
• Compliance;
• Information technology; and
• Finance.

15. Due Diligence Exercises
Disclosure relating to:

• Mergers;
• Acquisitions;
• Capital raising; and
• Sale of business assets.

16. Outsourcing Arrangements
Disclosure to outsourced service providers.
17. Consultants and Adjusters
Disclosure to professional advisers.
18. Suspected Criminal Activities
Disclosure where the bank reasonably suspects that an offence has been, is being or may be committed.


Confidentiality During Court Proceedings
Even where disclosure is permitted, section 134 allows courts to protect customer privacy.
The court may:

• Conduct proceedings in camera;
• Restrict publication;
• Seal documents; and
• Make confidentiality orders.

Part II – Confidentiality under Common Law and Equity
Tan Eng Seong v Malayan Banking Bhd
Principle
Confidentiality is an implied contractual duty.
Disclosure of customer information to the customer’s brother constituted a breach of confidence.
Significance

• Family members remain third parties.
• Actual financial loss is unnecessary.
• Nominal damages may be awarded.

Wong Yeng Mun v CIMB Bank Berhad
Principle
Confidentiality belongs to the customer.
Sending bank statements to the wrong address constituted a breach.
Significance

• Negligent disclosure is sufficient.
• Banks must maintain effective safeguards.

Tan Lay Soon v Kam Mah Theatre Sdn Bhd
Principle
Confidentiality belongs to the customer and may be waived.
Consent may be:

• Express; or
• Implied.

Disclosure necessary to complete a customer-authorised transaction is lawful.


Part III – Extra-Territorial Disclosure
Attorney General of Hong Kong v Zauyah Wan Chik
Principle
Banking secrecy legislation does not automatically have extra-territorial effect.
Disclosure compelled in foreign proceedings does not necessarily create criminal liability in Malaysia.
Significance
The administration of justice may justify disclosure outside Malaysia.


Part IV – Illegally Obtained Information
Wako Merchant Bank v Lim Lean Heng
Principle
Information obtained in breach of banking secrecy laws remains admissible if relevant.
Parliament criminalised unlawful disclosure but did not render such information inadmissible.
Significance
The court distinguishes:

• Criminal liability for disclosure; and
• Admissibility of evidence.

The two are separate issues.


Part V – Public Information
Hj Salleh Hj Janan v Financial Information Services Sdn Bhd
Facts
Financial Information Services Sdn Bhd provided information that the plaintiff had previously been adjudged bankrupt.
The information was based on court orders published in newspapers and the Gazette.
The plaintiff sued for libel.


Held
The claim was dismissed.
The defendant merely repeated information already contained in public court records.


Principle
A public fact is not confidential.
Information already published in:

• Court records;
• Newspapers; or
• The Gazette

may be restated without breaching confidentiality.


Significance
Banking secrecy protects confidential information.
It does not protect information that has already entered the public domain.


Part VI – Banker’s Professional Duty and Concurrent Liability
Bank Utama (M) Bhd v Insan Budi Sdn Bhd [2009] 1 MLJ 148
Facts
The plaintiff obtained an international trade facility from Bank Utama for the import and sale of raw sugar.
To facilitate the transaction, the plaintiff instructed the bank to issue a confirmed, irrevocable, divisible, assignable and transferable cash-blocked SWIFT Telegraphic Transfer (STT).
The bank subsequently transmitted the SWIFT instruction using an incorrect procedure.
Instead of sending the SWIFT transfer through the proper SWIFT system, it was transmitted by facsimile.
As a result:

• The overseas bank could not process the transaction;
• The sugar supplier terminated the supply contract;
• The plaintiff lost the downstream sale arrangement; and
• Significant losses were incurred.

The plaintiff sued the bank for:

1. Breach of contract; and
2. Negligence.

Issue
Could the bank be liable simultaneously:

• In contract; and
• In tort (negligence)?

Held
The Court of Appeal dismissed the bank’s appeal.
The court held that the bank was liable.


Reasoning
Wrong Procedure Used
Evidence showed that the SWIFT transfer could not be processed because the bank used an incorrect transmission procedure.
The failure directly caused the collapse of the transaction.


Concurrent Liability Exists
The court held that professional advisers may owe duties:

• Under contract; and
• Under tort.

A bank is not immune from negligence simply because a contractual relationship exists.
Unless the contract expressly excludes tortious liability, both causes of action may coexist.


Professional Duty to Advise
The bank argued that it merely followed instructions.
The court rejected this argument.
The customer instructed the bank to issue a SWIFT transfer but did not understand the technical operation of the SWIFT system.
The bank officer, as a banking professional, ought to have known that:
A SWIFT message cannot be transmitted by facsimile.
The bank therefore had a duty to advise its customer of the correct procedure.


Hasan Lah JCA
The Court of Appeal adopted the modern principle that:
A professional adviser may be liable concurrently in contract and negligence unless the contract excludes tortious liability.
The court relied upon authorities from:

• Canada;
• New Zealand;
• Singapore; and
• Malaysia.

Legal Principle
Bankers are professionals.
Where a bank undertakes to perform specialised banking services:

• It must exercise reasonable skill and care.
• It may owe both contractual and tortious duties.
• It may have a duty to advise customers regarding technical banking procedures.

Case Scenario
Facts
A customer instructs a bank officer to transfer funds through an international payment system.
The customer incorrectly believes the transfer can be completed through ordinary email.
The bank officer knows this is impossible but remains silent and follows the customer’s mistaken instruction.
The transaction fails and the customer suffers losses.
Solution
Applying Bank Utama v Insan Budi:
The bank may be liable:

• For breach of contract; and
• For negligence.

As a banking professional, the bank had a duty to advise the customer regarding the proper procedure.


Critical Analysis
This case significantly expands the traditional banker-customer relationship.
Traditionally, banks merely executed customer instructions.
However, where the bank possesses specialist knowledge unavailable to the customer, the court may impose a duty to advise.
The decision demonstrates that modern banks are not merely custodians of money but professional service providers expected to exercise expertise and reasonable care.


Key Examination Principles
Section 132 FSA 2013

• Restricts arbitrary inquiry into customer affairs.
• Permits BNM investigations.

Section 133 FSA 2013

• Creates statutory secrecy obligations.
• Covers all customer information.
• Breach attracts criminal sanctions.

Section 134 FSA 2013

• Creates exceptions to secrecy.
• Contains 18 permitted disclosures.
• Allows court protection of confidentiality.

Tan Eng Seong

• Confidentiality is contractual.
• Disclosure to relatives may be a breach.

Wong Yeng Mun

• Confidentiality belongs to the customer.
• Negligent disclosure creates liability.

Tan Lay Soon

• Confidentiality may be waived.
• Consent may be implied.

Zauyah Wan Chik

• No automatic extra-territorial application.

Wako Merchant Bank

• Illegally obtained information may still be admissible.

Hj Salleh Hj Janan

• Public facts are not confidential.

Bank Utama v Insan Budi

• Banks may be liable concurrently in contract and negligence.
• Professional bankers owe duties of skill and care.
• Banks may have a duty to advise customers regarding technical banking matters.
• Failure to follow proper banking procedures may result in substantial liability.

Conclusion
Malaysian banking secrecy law combines statutory protection under sections 132–134 FSA 2013 with contractual, equitable and tortious principles developed by the courts. The cases demonstrate that confidentiality belongs to the customer and remains a cornerstone of banking law. At the same time, modern banking law imposes broader professional obligations on banks, including duties of care and advice. Consequently, a bank may face criminal liability for unlawful disclosure, civil liability for breach of confidence, and concurrent liability in contract and negligence where it fails to perform its professional functions with reasonable skill and care.

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Malaysian Banking Law – Customers’ Rights, Customers’ Duties, the Macmillan Duty, Greenwood Duty, Estoppel, and Bank Liability for Forged Cheques
Case Scenario
Mega Builders Sdn Bhd maintains a current account with ABC Bank. Over several years, the company’s accounts manager forges numerous company cheques and fraudulently withdraws RM800,000 from the account. The bank honours the cheques and debits the company’s account accordingly.
In addition, one of the company’s directors orally instructs the bank to transfer funds from the company’s account on several occasions. These transactions appear in the company’s bank statements. The directors become aware of these transactions and certain irregularities but do not raise any complaint with the bank for almost eight years.
Eventually, an audit uncovers both the forged cheques and disputed debit transactions. Mega Builders commences legal proceedings against the bank seeking recovery of all monies withdrawn.
The bank argues that the company failed to report the irregularities promptly and should therefore be prevented from challenging the transactions. The bank further contends that the company failed to maintain adequate internal controls to prevent employee fraud.
The dispute raises issues concerning customers’ rights, customers’ duties, forged cheques, estoppel, and the extent of bank liability under Malaysian banking law.


Nature of the Banker-Customer Relationship
The banker-customer relationship is fundamentally contractual in nature.
As explained by Joachimson v Swiss Bank Corporation, a bank receives money from its customer not as trustee but as borrower. The money deposited becomes the bank’s property, and the bank undertakes to repay an equivalent amount upon demand by the customer.
The bank also undertakes:

• to receive deposits;
• to collect bills and other instruments for the customer;
• to honour valid payment instructions;
• to honour properly drawn cheques where sufficient funds exist; and
• not to terminate the banking relationship without reasonable notice.

Correspondingly, the customer undertakes to exercise reasonable care when issuing written instructions so as not to mislead the bank or facilitate fraud.


Customers’ Rights
1. Right to Repayment
The customer has a contractual right to repayment of funds standing to the credit of the account.
The bank’s obligation is not to return the exact money deposited but to repay an equivalent amount upon a valid demand at the branch where the account is maintained.


2. Right to Draw Cheques
A customer with sufficient funds has the right to issue cheques against the available balance.
The bank owes a corresponding duty to honour properly drawn cheques unless:

• there are insufficient funds;
• the cheque is irregular;
• payment is prohibited by law; or
• the account has been lawfully restricted.

3. Right to Interest
Customers maintaining savings or deposit accounts are generally entitled to interest or returns in accordance with the terms governing the account.
Current accounts ordinarily do not attract interest unless specifically agreed.


Customers’ Duties at Common Law
A significant principle of banking law is that customers owe only limited duties to their bankers.
The Malaysian Supreme Court in United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd confirmed that, at common law, customers owe only two recognised duties:

1. The Macmillan Duty.
2. The Greenwood Duty.

No wider duties are imposed unless expressly agreed by contract.


The Macmillan Duty
The first duty originates from London Joint Stock Bank v Macmillan and Arthur.
Under this duty, the customer must exercise reasonable care when drawing cheques and issuing written instructions.
The customer must not prepare a cheque in a manner that facilitates fraud or forgery.
Examples include:

• leaving large blank spaces;
• writing ambiguous amounts;
• signing incomplete cheques; and
• issuing instructions capable of easy alteration.

The purpose of the duty is to prevent the customer from misleading the bank or creating opportunities for fraud.


The Greenwood Duty
The second duty originates from Greenwood v Martins Bank.
Once a customer becomes aware that forged cheques or unauthorised transactions have occurred, the customer must promptly notify the bank.
Failure to provide timely notice may result in the customer being unable to recover losses that could have been prevented had the bank been informed earlier.
The duty arises only after the customer acquires knowledge of the forgery or unauthorised transaction.


No General Duty to Prevent Employee Fraud
The law does not impose a wider obligation on customers to organise their business affairs so as to prevent forgery by employees.
This principle was firmly established by the Privy Council in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd.
In that case, an accounts clerk forged approximately 300 cheques amounting to HK$5.5 million. The Privy Council held that customers owe only the Macmillan Duty and Greenwood Duty.
There is no implied duty requiring customers to:

• establish fraud-proof internal controls;
• supervise employees to prevent forgery;
• conduct audits specifically for the bank’s protection; or
• take general precautions in the management of their business to prevent forged cheques.

The court refused to imply any broader duty into the banker-customer contract.


No General Duty to Inspect Bank Statements
Another important principle established in Tai Hing Cotton Mill and reaffirmed in United Asian Bank is that customers are not under a common law duty to inspect periodic bank statements merely to protect the bank.
Accordingly, absent an express contractual provision:

• customers are not obliged to examine every statement;
• customers are not required to verify every debit entry;
• customers are not responsible for detecting forged signatures through statement review.

The burden of verifying payment instructions remains primarily with the bank.


Duty to Inform the Bank of Known Irregularities and Estoppel
Although there is no general duty to inspect statements, a different principle applies once the customer becomes aware of irregularities.
A customer who discovers an unauthorised transaction, forged cheque, or suspicious debit must notify the bank within a reasonable time.
Failure to do so may give rise to estoppel.
Estoppel prevents a person from asserting a legal claim where his conduct has induced another party to act to its detriment.
In banking law, where a customer remains silent despite knowing of unauthorised transactions, and the bank is prejudiced by the delay, the customer may be estopped from later challenging the transactions.


Proven Development Sdn Bhd v Hongkong and Shanghai Banking Corporation
Facts
In Proven Development Sdn Bhd v Hongkong and Shanghai Banking Corporation, the plaintiff company maintained a current account with the defendant bank.
One of the company’s directors gave oral instructions to the bank to debit the account on three occasions between 1976 and 1977 amounting to RM115,000.
Years later, the company challenged the debits on the basis that they lacked proper authority under the directors’ resolution.
However, the company had failed to raise any complaint concerning the transactions for approximately nine years.


Held
The High Court held that oral instructions given to the bank were capable of subsequent ratification by the directors.
More importantly, the court emphasised that once the company became aware of any alleged irregularity, it was incumbent upon the company to notify the bank promptly.
By waiting nine years before bringing legal proceedings, the company caused substantial prejudice to the bank, which could no longer produce certain documentary evidence because of the passage of time.
Accordingly, the company was estopped from asserting its claim against the bank.


Liability of Banks for Forged Cheques
Under common law, a forged cheque is legally void.
A bank has no authority to honour a forged instrument because the customer’s mandate is absent.
In United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd, the Supreme Court held that:

• liability for paying forged cheques arises under the tort of conversion;
• conversion is a tort of strict liability;
• the bank is liable even if it acted honestly;
• the bank is liable even if it exercised reasonable care.

The forged instrument is a nullity, and payment upon it is unauthorised.


New Ace Digital Print Sdn Bhd v Public Bank Bhd
The Malaysian courts have continued to uphold this principle.
In New Ace Digital Print Sdn Bhd v Public Bank Bhd, the bank was held liable in damages for making payment based on a forged cheque.
The case reinforces the principle that the responsibility for verifying signatures and mandates generally rests with the bank.


Critical Analysis
The modern law seeks to balance customer protection with customer responsibility.
On one hand, banks are professional financial institutions entrusted with verifying payment instructions. Since forged cheques are nullities, the law places primary responsibility on banks that honour them.
On the other hand, customers cannot remain passive once they become aware of fraud or irregularities. The Macmillan Duty and Greenwood Duty ensure that customers do not contribute to losses through carelessness or silence.
The doctrine of estoppel further promotes fairness by preventing customers from delaying complaints until evidence has disappeared or the bank’s ability to defend itself has been prejudiced.
The combined effect of Macmillan, Greenwood, Tai Hing Cotton Mill, United Asian Bank, and Proven Development creates a balanced framework that protects both parties while preserving confidence in the banking system.


Solution to the Case Scenario
Forged Cheques
Mega Builders would likely succeed in recovering losses arising from the forged cheques.
The forged instruments are legally void, and the bank had no authority to honour them.
The bank remains primarily liable under the tort of conversion.


Employee Fraud
The bank cannot avoid liability merely by arguing that the company failed to maintain adequate internal controls.
Following Tai Hing Cotton Mill and United Asian Bank, customers owe no general duty to organise their business affairs to prevent employee fraud.


Delayed Complaint Regarding Debit Transactions
The position differs regarding the disputed debit transactions.
The directors became aware of the transactions but waited several years before raising any complaint.
Applying Proven Development, the company’s delay may create an estoppel if the bank has suffered prejudice because relevant records or evidence are no longer available.
The company may therefore be prevented from challenging those transactions.


Practical Application
For Customers
Customers should:

• draw cheques carefully and clearly;
• immediately report forged signatures;
• notify the bank promptly upon discovering irregular transactions;
• maintain reasonable internal controls;
• retain banking records and supporting documents.

Although there is generally no duty to inspect statements, regular review remains prudent commercial practice.


For Banks
Banks should:

• verify signatures rigorously;
• maintain effective fraud detection systems;
• retain transaction records for appropriate periods;
• investigate reported irregularities promptly;
• recognise that payment on forged instruments generally attracts strict liability.

Conclusion
Under Malaysian banking law, customers possess the rights to repayment, cheque facilities, and interest where contractually provided. In return, customers owe only two recognised common law duties: the Macmillan Duty, requiring reasonable care when drawing cheques, and the Greenwood Duty, requiring prompt notification of known forgeries or unauthorised transactions. Neither Malaysian nor English law imposes a general duty upon customers to supervise employees, prevent internal fraud, or routinely inspect bank statements for the bank’s benefit. Nevertheless, once a customer becomes aware of an irregularity, he must inform the bank within a reasonable time. Failure to do so may give rise to estoppel, preventing the customer from later challenging the transaction if the delay prejudices the bank. Accordingly, while banks generally bear strict liability for paying forged cheques, customers who knowingly remain silent about irregularities may lose their right to recover losses arising from those transactions.

​

Malaysian Banking Law – Banking Secrecy, Confidentiality and Exceptions to Disclosure
Introduction
Banking secrecy is one of the most important duties owed by a bank to its customers. Customers entrust banks with confidential information relating to their finances, assets, liabilities, transactions and business affairs. The law therefore imposes a duty on banks to preserve the secrecy of such information.
The objectives of banking secrecy are:

• To protect customer privacy;
• To preserve public confidence in the banking system;
• To encourage customers to deal openly with their banks; and
• To ensure that banking information is disclosed only in legally recognised circumstances.

In Malaysia, banking secrecy is principally governed by:

• Section 132 FSA 2013 (Restriction on inquiry into customer affairs);
• Section 133 FSA 2013 (Statutory duty of secrecy); and
• Section 134 FSA 2013 (Permitted disclosures and exceptions).

These statutory provisions are supplemented by contractual and equitable principles developed through case law.


1. Restriction on Inquiry into Customer Affairs (Section 132 FSA 2013)
General Rule
Section 132 protects customers from arbitrary investigations into their banking affairs.
Neither:

• The Minister of Finance; nor
• Bank Negara Malaysia (BNM)

may ordinarily inquire into the affairs or account of a particular customer.
This provision protects customer privacy and prevents unnecessary governmental interference in the banker-customer relationship.


Exception
BNM may investigate customer accounts where necessary to exercise its powers and functions under:

• The Financial Services Act 2013;
• The Islamic Financial Services Act 2013; or
• The Central Bank of Malaysia Act 2009.

Thus, confidentiality cannot be used to obstruct legitimate regulatory supervision.


2. Statutory Duty of Secrecy (Section 133 FSA 2013)
General Rule
Section 133 imposes a strict duty of confidentiality upon:

• Financial institutions;
• Directors;
• Officers;
• Employees;
• Agents; and
• Former directors, officers and agents.

These persons must not disclose any information or document relating to a customer’s affairs or account.
The duty continues even after employment or office has ended.


Scope of Protection
The protection covers:

• Savings accounts;
• Current accounts;
• Fixed deposits;
• Financing facilities;
• Credit information;
• Securities holdings;
• Customer identities;
• Account balances;
• Transaction histories; and
• All information obtained through the banking relationship.

The protection extends beyond account statements and includes all information acquired because of the banking relationship.


Criminal Liability
A person who unlawfully discloses customer information commits an offence punishable by:

• Imprisonment up to five years;
• Fine up to RM10 million; or
• Both.

Further Disclosure Prohibited
Section 133(3) further prohibits any person from disclosing information that he knows was originally disclosed in breach of section 133.
Thus, liability may extend beyond the original wrongdoer.


3. Exceptions to Banking Secrecy (Section 134 FSA 2013)
Although secrecy is the general rule, section 134 recognises that confidentiality cannot be absolute.
Banks operate within a legal and commercial environment that sometimes requires disclosure.
Accordingly, section 134 permits disclosure:

• Under the circumstances listed in Schedule 11; or
• With the written approval of Bank Negara Malaysia.

The 18 Permitted Disclosures under Schedule 11
1. Customer Consent
A bank may disclose information where written consent is given by:

• The customer;
• The customer’s executor or administrator; or
• The legal representative of an incapacitated customer.

Example
A customer authorises his bank to provide information to another bank when applying for a housing loan.
The disclosure is lawful because the customer has waived confidentiality.


2. Administration of a Deceased Customer’s Estate
Disclosure is permitted in connection with:

• Probate proceedings;
• Letters of administration;
• Faraid certificates; and
• Distribution orders.

3. Bankruptcy and Winding-Up Proceedings
Disclosure is permitted where the customer:

• Has been declared bankrupt;
• Is being wound up; or
• Has been dissolved.

4. Civil or Criminal Proceedings Involving the Bank
Disclosure is permitted where litigation involves:

• The bank and its customer;
• A guarantor or surety;
• Competing claimants to funds; or
• Property in which the bank has an interest.

5. Garnishee Orders
A bank may disclose information necessary to comply with a garnishee order served upon it.
Banker’s Duty
Once a garnishee order is served, the bank must:

• Freeze the attached funds; and
• Refrain from releasing those funds until directed by the court.

6. Court Orders
Disclosure is permitted pursuant to a court order issued by a court not lower than the Sessions Court.


7. Requests by Enforcement Agencies
Disclosure is permitted where required by:

• Police investigations;
• MACC investigations;
• Anti-money laundering investigations; or
• Other enforcement agencies acting under written law.

8. Malaysia Deposit Insurance Corporation (PIDM)
Disclosure is permitted for the performance of PIDM’s statutory functions.


9. Securities Commission and Capital Market Authorities
Investment banks may disclose information for purposes connected with:

• The Securities Commission;
• Stock exchanges;
• Derivatives exchanges;
• Clearing houses; and
• Central depositories.

10. Approved Trade Repositories
Disclosure is permitted for trade repository functions under capital market legislation.


11. Inland Revenue Board (IRB)
Disclosure is permitted where information is required under tax legislation and international tax information exchange arrangements.


12. Credit Reporting Agencies
Banks may disclose credit information to registered credit reporting agencies.


13. Supervisory Authorities
Disclosure is permitted to local or foreign supervisory authorities exercising functions similar to those of BNM.


14. Centralised Group Functions
Disclosure is permitted for group functions such as:

• Internal audit;
• Risk management;
• Information technology;
• Finance; and
• Compliance.

15. Due Diligence Exercises
Disclosure is permitted for:

• Mergers and acquisitions;
• Capital raising exercises; and
• Sale of business assets.

16. Outsourcing Arrangements
Disclosure is permitted where banking functions have been outsourced.


17. Consultants and Adjusters
Disclosure is permitted to professional advisers engaged by the bank.


18. Suspicion of Criminal Activity
Disclosure is permitted where the bank reasonably suspects that an offence has been, is being or may be committed.


Confidentiality During Court Proceedings
Even where disclosure is permitted under section 134, customer confidentiality remains protected.
The court may:

• Conduct proceedings in camera;
• Restrict access to confidential information;
• Prohibit publication of identifying information; and
• Make further confidentiality orders.

The purpose is to minimise unnecessary exposure of customer information.


Banking Confidentiality under Contract and Equity
Apart from statute, confidentiality is also recognised as:
An Implied Contractual Duty
Every banker-customer relationship contains an implied obligation that customer information will remain confidential.
An Equitable Duty
Equity protects confidential information and provides remedies such as:

• Injunctions;
• Damages; and
• Other equitable relief.

Important Cases
Tan Eng Seong v Malayan Banking Bhd
Principle
Disclosure of banking information to a customer’s brother constituted a breach of confidentiality.
The case confirms that:

• Confidentiality is an implied contractual term.
• Family members remain third parties unless authorised.
• Nominal damages may be awarded.

Wong Yeng Mun v CIMB Bank Berhad
Principle
Bank statements sent to the wrong address and opened by the customer’s wife constituted a breach of confidentiality.
The case confirms that:

• Confidentiality belongs to the customer.
• Administrative negligence may create liability.
• Banks must maintain proper safeguards.

Tan Lay Soon v Kam Mah Theatre Sdn Bhd
Principle
Confidentiality belongs to the customer and may be waived expressly or impliedly.
Disclosure necessary to complete a customer-authorised transaction is lawful.


Attorney General of Hong Kong v Zauyah Wan Chik
Principle
Banking secrecy legislation does not automatically have extra-territorial effect.
Disclosure compelled by foreign court proceedings may not create criminal liability in Malaysia.


Wako Merchant Bank v Lim Lean Heng
Principle
Information obtained in breach of banking secrecy laws remains admissible if relevant.
Parliament created criminal sanctions for unlawful disclosure but did not render such evidence inadmissible.
The remedy lies in criminal prosecution, injunctions or damages rather than exclusion of evidence.


Hj Salleh Hj Janan v Financial Information Services Sdn Bhd
Principle
Publicly available court records are not confidential.
A person may repeat or republish a public fact without breaching confidentiality.
The defence of justification succeeds where the statement accurately reflects public records.


Case Scenario
Facts
A bank receives a garnishee order attaching RM500,000 standing in a customer’s account.
The customer instructs the bank to transfer the funds elsewhere before the court hearing.
The bank complies and transfers the money.
Legal Consequences
The bank has acted improperly.
Upon service of the garnishee order, the bank owes a duty to preserve the attached funds.
The bank must not release the money unless authorised by the court.
The bank may therefore be liable for breaching its obligations arising from the garnishee proceedings.


Key Examination Principles
Section 132

• Restricts arbitrary inquiries into customer affairs.
• Protects customer privacy.
• Allows BNM investigations for statutory purposes.

Section 133

• Creates a statutory duty of secrecy.
• Applies to banks and banking personnel.
• Covers all customer information.
• Continues after employment ends.
• Breach attracts criminal sanctions.

Section 134

• Creates exceptions to confidentiality.
• Contains 18 permitted disclosures in Schedule 11.
• Allows disclosure with BNM approval.
• Preserves confidentiality through in-camera proceedings and confidentiality orders.

Common Law Principles

• Confidentiality belongs to the customer.
• Confidentiality may be waived expressly or impliedly.
• Confidentiality is protected by contract and equity.
• Public facts are not confidential.
• Illegally obtained information may still be admissible if relevant.
• Banking secrecy does not automatically operate outside Malaysia.

Conclusion
Malaysian banking secrecy law consists of a comprehensive framework combining statutory protection, contractual obligations and equitable principles. Section 133 establishes the general duty of secrecy, while section 134 recognises carefully defined exceptions necessary for the administration of justice, commercial transactions, regulatory supervision and public interest. The cases of Tan Eng Seong, Wong Yeng Mun, Tan Lay Soon, Zauyah Wan Chik, Wako Merchant Bank, and Hj Salleh Hj Janan demonstrate that confidentiality remains a fundamental customer right, but one that must be balanced against legitimate legal and commercial necessities. Ultimately, banking secrecy protects customer privacy without allowing confidentiality to become an obstacle to justice, regulation or lawful disclosure.

​

Malaysian Banking Law – Banking Secrecy, Confidentiality and Disclosure
Introduction
Banking secrecy is a fundamental aspect of the banker-customer relationship. It protects confidential information obtained by a bank concerning a customer’s affairs and accounts. The duty exists to safeguard customer privacy, preserve confidence in the banking system and ensure that banking information is disclosed only in circumstances recognised by law.
In Malaysia, banking secrecy is governed principally by sections 132, 133 and 134 of the Financial Services Act 2013 (FSA 2013), which replaced the secrecy provisions formerly found in the Banking and Financial Institutions Act 1989 (BAFIA).
The duty of confidentiality is protected through:

• Statute;
• Contract; and
• Equity.

Consequently, unauthorised disclosure may result in:

• Criminal liability;
• Civil liability;
• Equitable remedies; and
• Regulatory sanctions.

However, the courts have repeatedly emphasised that banking secrecy is not absolute. The law must balance customer privacy against the requirements of justice, commercial practicality, regulatory supervision and public interest.


1. Statutory Duty of Secrecy
Section 133 FSA 2013
Section 133 imposes a duty of secrecy upon:

• Financial institutions;
• Directors;
• Officers;
• Employees;
• Agents; and
• Former directors, officers and agents.

The duty prohibits disclosure of information relating to a customer’s affairs or account.
The protection extends to:

• Account balances;
• Transaction histories;
• Financing facilities;
• Securities holdings;
• Credit information;
• Customer identities; and
• Any information acquired through the banking relationship.

Breach may attract:

• Imprisonment up to five years;
• A fine up to RM10 million; or
• Both.

2. Banking Confidentiality under Contract and Equity
Apart from statute, confidentiality is also recognised as:
An Implied Contractual Duty
The banker-customer contract contains an implied term that customer information will remain confidential.
An Equitable Obligation
Equity protects confidential information and may grant remedies such as injunctions and damages for misuse of confidential information.
The Malaysian courts have developed these principles through a number of important cases.


Tan Eng Seong v Malayan Banking Bhd
Principle
Disclosure of customer information to the customer’s brother constituted a breach of the implied contractual duty of confidentiality.
The case confirms that:

• Confidentiality is an implied contractual term.
• Family members remain third parties unless authorised.
• Nominal damages may be awarded even where actual loss is minimal.

Wong Yeng Mun v CIMB Bank Berhad
Principle
The bank negligently sent account statements to the wrong address where they were opened by the customer’s wife.
The court held that:

• The privilege of confidentiality belongs to the customer.
• Administrative negligence may amount to a breach of confidentiality.
• Banks must maintain adequate safeguards to protect customer information.

Tan Lay Soon v Kam Mah Theatre Sdn Bhd
Principle
The court held that confidentiality belongs to the customer and may be waived either expressly or impliedly.
Where disclosure is necessary to complete a transaction authorised by the customer, banking secrecy will not prevent such disclosure.


3. Cross-Border Disclosure and Extra-Territorial Effect
Attorney General of Hong Kong v Zauyah Wan Chik & Ors
The Court of Appeal held that section 97 BAFIA was not expressed to have extra-territorial effect.
Accordingly:

• Disclosure in foreign court proceedings does not automatically create criminal liability in Malaysia.
• Witnesses compelled by foreign courts may rely on legal compulsion as a defence.
• Banking secrecy must sometimes yield to the administration of justice.

4. Illegally Obtained Banking Information Remains Admissible
Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng
The defendants argued that banking information obtained in breach of section 97 BAFIA should be inadmissible in support of a Mareva injunction.
The High Court rejected this argument.
Legal Principle
Parliament created criminal offences for unlawful disclosure of banking information but did not provide that such information would become inadmissible in court proceedings.
Accordingly:

• Illegally obtained evidence remains admissible if relevant.
• Criminal liability and evidential admissibility are separate issues.
• The person disclosing the information may face criminal consequences, but the evidence itself may still be used in court.

The Court of Appeal subsequently affirmed that breach of confidentiality is ordinarily remedied through injunctions or damages rather than by excluding evidence.


5. Public Information and Banking Confidentiality
An important limitation on banking secrecy concerns information that is already publicly available.
Confidentiality cannot ordinarily be claimed over facts that have entered the public domain through lawful publication.
This principle was considered in the following case.


Hj Salleh Hj Janan v Financial Information Services Sdn Bhd; Affin-ACF Finance Bhd (Third Party) [2005] 1 CLJ 241
Facts
Financial Information Services Sdn Bhd (FIS) supplied information to Affin-ACF Finance Bhd indicating that the plaintiff had twice been adjudged bankrupt.
The information originated from court records and bankruptcy orders that had previously been published in newspapers and the Government Gazette.
However, FIS failed to mention that the bankruptcy orders had subsequently been rescinded and annulled.
The plaintiff sued FIS for libel, arguing that publication of the information damaged his reputation.


Held
The High Court dismissed the plaintiff’s claim.
The court held that FIS merely reproduced information contained in public court records and publicly available publications.
Since the information related to facts already available to the public, FIS was entitled to repeat or restate those facts.
The defence of justification therefore succeeded.


Judgment of Linton Albert JC
The court adopted the principle that:
A statement that a decree or order has been made by a public court is a public fact which anybody is entitled to state.
The court emphasised that information already appearing in court records, newspapers or the Gazette loses its confidential character because it has entered the public domain.


Legal Principle
The case establishes that:
Public Facts Are Not Confidential
Information contained in public court records is no longer confidential.
A person who merely repeats or republishes such information is generally not liable for disclosing confidential information.
Repetition of Public Information Is Not a Breach of Banking Secrecy
Banking secrecy protects confidential information.
It does not protect information that has already become publicly available through lawful means.
Defence of Justification
Where a statement accurately reflects a public court record, the defence of justification may defeat a defamation claim.


Significance
This case demonstrates an important limitation on banking confidentiality.
While banking secrecy protects private customer information, it cannot be used to conceal information that has already become part of the public record through judicial proceedings.
The law protects secrecy, not secrecy that has already ceased to exist.


Case Scenario: Public Bankruptcy Record
Facts
A finance company receives information from a credit reporting agency indicating that Ahmad was adjudged bankrupt five years ago.
The information was obtained from court records published in the Gazette.
Ahmad sues, alleging breach of confidentiality and defamation.


Solution
Applying Hj Salleh Hj Janan:

• The information originated from public court records.
• The information was already publicly available.
• The agency merely repeated a public fact.
• Confidentiality cannot attach to information already in the public domain.

Accordingly, the claim is unlikely to succeed.


Critical Analysis
The decision strikes a balance between:
Privacy Rights
Individuals deserve protection against unauthorised disclosure of genuinely confidential information.
Public Interest
Court orders, bankruptcy proceedings and other judicial records are matters of public record.
Allowing persons to claim confidentiality over publicly available information would undermine legal certainty and commercial decision-making.
The court therefore distinguished between:

• Confidential banking information; and
• Publicly available legal facts.

6. Banker’s Duty Regarding Garnishee Orders
A bank may receive a garnishee order from a customer’s creditor.
Once served with the order, the bank owes a duty to the court not to release the attached funds unless authorised by the court.
The bank must preserve the funds pending further directions.
Failure to comply may expose the bank to liability.


Bank Utama (M) Bhd v Insan Budi Sdn Bhd
Principle
The Court of Appeal recognised that banks may owe duties not only under contract but also in tort.
Where a bank acting in its professional capacity fails to follow proper procedures in handling a credit facility, the bank may incur concurrent liability in:

• Contract; and
• Negligence.

Significance
The case demonstrates that a bank’s responsibilities extend beyond merely keeping customer information confidential.
Banks are professional financial institutions expected to exercise reasonable skill, care and competence when performing banking functions.
A failure to do so may result in liability under multiple legal principles.


Key Examination Principles
Banking Secrecy

• Governed principally by sections 132–134 FSA 2013.
• Protects information relating to customer affairs and accounts.

Tan Eng Seong Principle

• Confidentiality is an implied contractual duty.
• Disclosure to relatives may constitute breach.

Wong Yeng Mun Principle

• Confidentiality belongs to the customer.
• Negligent disclosure may create liability.

Tan Lay Soon Principle

• Confidentiality belongs to the customer.
• Consent may be express or implied.

Zauyah Wan Chik Principle

• Banking secrecy laws are not automatically extra-territorial.
• Disclosure under legal compulsion may be justified.

Wako Merchant Bank Principle

• Information obtained in breach of banking secrecy laws remains admissible if relevant.
• Criminal liability and admissibility are separate issues.

Hj Salleh Hj Janan Principle

• Publicly available court records are not confidential.
• A public fact may be repeated or restated.
• Banking secrecy does not protect information already in the public domain.

Bank Utama Principle

• Banks may owe concurrent duties in contract and tort.
• Failure to exercise proper professional care may create liability.

Conclusion
Malaysian banking secrecy law protects customer information through statutory provisions, contractual obligations and equitable principles. However, confidentiality is not absolute. The courts have recognised several important limitations, including customer consent, legal compulsion, public court records, admissibility of relevant evidence, and the practical requirements of commerce and justice. Cases such as Tan Eng Seong, Wong Yeng Mun, Tan Lay Soon, Zauyah Wan Chik, Wako Merchant Bank, and Hj Salleh Hj Janan collectively demonstrate that while customer privacy remains a fundamental concern, banking secrecy must be balanced against broader legal, commercial and public interests.

​

Malaysian Banking Law – Mareva Injunction
Definition
A Mareva Injunction (now commonly referred to as a Freezing Order) is a court order that restrains a defendant from disposing of, transferring, dissipating, or dealing with assets pending the determination of legal proceedings.
The purpose of a Mareva Injunction is not to give the plaintiff security over the assets, but to preserve the assets so that they remain available to satisfy a future judgment.
In banking law, a Mareva Injunction frequently affects bank accounts because money held in accounts can be quickly transferred or withdrawn before a judgment is obtained.


Purpose of a Mareva Injunction
The primary purpose is to prevent a defendant from frustrating the enforcement of a future judgment by:

• Removing assets from the jurisdiction;
• Transferring assets to third parties;
• Concealing assets;
• Dissipating funds held in bank accounts; or
• Reducing the value of assets available to satisfy a judgment.

A Mareva Injunction therefore preserves the status quo until the dispute is resolved.


Nature of the Remedy
A Mareva Injunction is:

• An equitable remedy;
• Discretionary in nature;
• Usually granted before trial;
• Frequently obtained on an ex parte basis (without notifying the defendant);
• Intended to preserve assets rather than determine ownership.

The injunction does not transfer ownership of assets to the plaintiff.
The defendant remains the legal owner of the assets but loses the freedom to deal with them in a manner prohibited by the court order.


Historical Origin
The remedy derives its name from the English case of:
Mareva Compania Naviera SA v International Bulkcarriers SA
where the English Court of Appeal recognised the court’s power to freeze a defendant’s assets pending trial.
The decision revolutionised commercial litigation by providing a practical mechanism to prevent defendants from defeating judgments through asset dissipation.


Requirements for Obtaining a Mareva Injunction
A plaintiff generally must establish:
1. A Good Arguable Case
The plaintiff must demonstrate that there is a serious issue to be tried and that the claim has a reasonable prospect of success.
The court does not determine the merits conclusively at this stage.


2. Assets Within the Jurisdiction
The defendant must possess assets capable of being frozen.
These assets may include:

• Bank accounts;
• Shares;
• Real property;
• Investments;
• Business assets.

3. Real Risk of Dissipation
The plaintiff must show a genuine risk that the defendant may:

• Remove assets;
• Conceal assets;
• Transfer funds;
• Dispose of property;
• Otherwise frustrate enforcement of a future judgment.

Mere suspicion is insufficient.
The court requires evidence demonstrating a real risk.


4. Full and Frank Disclosure
Because many Mareva applications are made ex parte, the applicant must disclose all material facts to the court, including facts that may be unfavourable to its case.
Failure to do so may result in the injunction being discharged.


Effect on Bank Accounts
A Mareva Injunction frequently operates against bank accounts.
For example:

• A sues B for RM5 million.
• A discovers that B maintains RM3 million in several bank accounts.
• A fears that B will transfer the money overseas.

The court grants a Mareva Injunction freezing the accounts.
Consequently:

• B remains the owner of the money.
• The accounts continue to exist.
• The bank cannot permit withdrawals or transfers contrary to the injunction.
• The funds remain preserved pending the outcome of the case.

Example
Facts
Ali sues Ahmad for RM2 million alleging fraud.
Ali discovers that Ahmad holds RM1.5 million in accounts with Maybank and CIMB Bank.
Evidence suggests Ahmad intends to transfer the funds to an overseas jurisdiction.


Court Order
The court grants a Mareva Injunction prohibiting Ahmad from:

• Withdrawing funds;
• Transferring money abroad;
• Dealing with specified assets.

The banks are notified of the order.


Result
The banks freeze the accounts to the extent specified by the order.
The funds remain available if Ali ultimately succeeds in the lawsuit.


Duties of the Bank Upon Receiving a Mareva Injunction
1. Duty to Comply with the Court Order
The bank must immediately comply with the injunction.
Failure may expose the bank to contempt proceedings.


2. Restriction on Transactions
The bank must not permit withdrawals or transfers inconsistent with the injunction.


3. Disclosure Obligations
The court may require the bank to disclose information regarding the defendant’s accounts and assets.
Such disclosure is legally justified notwithstanding banking confidentiality obligations.


4. Preservation of Assets
The bank must take reasonable steps to ensure that frozen assets remain intact pending further court directions.


Mareva Injunction vs Garnishee Order
Feature
Mareva Injunction
Garnishee Order

Purpose
Preserve assets
Enforce a judgment

Timing
Before or during proceedings
After judgment

Ownership of assets
Remains with defendant
Debt is paid to judgment creditor

Transfer of money
No transfer occurs
Money is transferred

Objective
Prevent dissipation
Recover judgment debt

Nature
Protective remedy
Enforcement remedy


Relationship with Banking Secrecy
A Mareva Injunction often requires disclosure of information concerning bank accounts.
This constitutes an exception to the bank’s duty of confidentiality because disclosure occurs pursuant to a court order and is therefore authorised by law.
The bank does not breach its duty of secrecy when complying with the injunction.


Case Illustration: Discovery of Bank Accounts
Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng
Facts
The plaintiff obtained judgment against the defendant and subsequently secured an ex parte Mareva Injunction.
Information concerning several bank accounts affected by the injunction was obtained by a private investigator.
The defendants argued that the information had been obtained in breach of statutory banking secrecy provisions and should therefore be inadmissible.


Held
The court refused to discharge the injunction.
The information remained admissible notwithstanding the alleged breach of banking secrecy provisions.
The accounts therefore continued to be subject to the Mareva Injunction.


Significance
The case demonstrates that courts may prioritise the administration of justice and asset preservation over objections concerning the manner in which account information was obtained.
It also illustrates the close relationship between banking secrecy issues and Mareva proceedings.


Critical Analysis
A Mareva Injunction is one of the most powerful interim remedies in commercial and banking litigation. Without such relief, a dishonest defendant could transfer funds out of bank accounts and render a future judgment worthless.
The remedy balances competing interests. On one hand, it protects plaintiffs from asset dissipation. On the other hand, because it can significantly restrict a defendant’s use of property before liability has been established, courts impose strict requirements such as a good arguable case, evidence of dissipation risk, and full and frank disclosure.
For banks, a Mareva Injunction creates legal obligations that override ordinary contractual duties owed to customers. Although the bank normally follows customer instructions, once a freezing order is served the bank’s paramount duty is compliance with the court order.


Examination Summary
Mareva Injunction (Freezing Order)

• An equitable court order freezing a defendant’s assets.
• Designed to prevent dissipation of assets before judgment.
• Commonly affects bank accounts.
• Does not transfer ownership of assets.
• Defendant remains owner but cannot freely deal with the assets.
• Requires:
  • Good arguable case;
  • Assets available for freezing;
  • Real risk of dissipation;
  • Full and frank disclosure.
• Banks must comply once notified.
• Distinct from a garnishee order because it preserves assets rather than enforcing a judgment.

Key Principle: A Mareva Injunction is a protective remedy aimed at ensuring that assets, including bank deposits, remain available to satisfy any judgment that may ultimately be obtained by the plaintiff.

​

Malaysian Banking Law – Garnishee Order
Definition
A garnishee order is a court order that enables a judgment creditor (a person who has obtained a judgment against a debtor) to recover the judgment debt by attaching money owed to the judgment debtor by a third party, known as the garnishee.
In banking law, the garnishee is usually a bank because the bank owes a debt to its customer in respect of the customer’s account balance.
A garnishee order therefore allows the court to direct the bank to pay money standing to the credit of the customer’s account directly to the judgment creditor instead of the customer.


Parties to a Garnishee Proceeding
1. Judgment Creditor
The party who has successfully obtained a court judgment and is entitled to receive payment.
2. Judgment Debtor
The party against whom the judgment has been entered and who owes the judgment debt.
3. Garnishee
A third party who owes money to the judgment debtor.
In banking cases, the garnishee is generally the bank that maintains the debtor’s account.


Legal Basis of a Garnishee Order
The operation of a garnishee order is founded upon the debtor-creditor relationship between a bank and its customer.
When money is deposited into a bank account:

• Ownership of the money passes to the bank.
• The bank becomes the debtor.
• The customer becomes the creditor.
• The customer acquires a contractual right to demand repayment from the bank.

Therefore, the customer’s bank balance represents a debt owed by the bank to the customer.
A garnishee order attaches that debt and redirects payment from the bank to the judgment creditor.


Procedure
Stage 1: Judgment Obtained
A creditor first obtains a court judgment against a debtor.
Example:

• Ali sues Ahmad.
• The court orders Ahmad to pay Ali RM100,000.
• Ahmad fails to satisfy the judgment.

Stage 2: Garnishee Order Nisi
Ali applies to the court for a garnishee order against Ahmad’s bank.
The court may issue a Garnishee Order Nisi, which:

• Temporarily freezes funds in Ahmad’s account up to the amount of the judgment debt.
• Requires the bank to appear before the court.
• Requires the bank to disclose whether it holds money belonging to Ahmad.

At this stage, the order is provisional and has not yet become final.


Stage 3: Garnishee Order Absolute
If the court is satisfied that the bank holds funds belonging to Ahmad, it may issue a Garnishee Order Absolute.
The bank is then legally required to:

• Pay the specified amount directly to Ali.
• Comply with the court order.
• Treat the payment as a valid discharge of its debt to Ahmad.

Practical Illustration
Assume:

• Ahmad owes Ali RM50,000 pursuant to a court judgment.
• Ahmad maintains a savings account with Maybank containing RM80,000.

The court issues:

1. A Garnishee Order Nisi.
2. Subsequently, a Garnishee Order Absolute.

The bank must pay RM50,000 directly to Ali.
Result:

• Ali receives RM50,000.
• RM30,000 remains in Ahmad’s account.

Effect on the Banker-Customer Relationship
1. Restriction on Customer’s Right to Withdraw
Once served with a garnishee order, the bank must preserve the attached funds and cannot permit the customer to withdraw them.


2. Duty to Honour Cheques Suspended
A bank is normally under a contractual duty to honour the customer’s valid payment instructions.
However, where a garnishee order has attached the funds, the bank must refuse payment of cheques or withdrawal instructions that would affect those funds.


3. Exception to Banking Secrecy
Although a bank generally owes a duty of confidentiality to its customer, disclosure of account information pursuant to garnishee proceedings is legally justified because it is made under compulsion of law and pursuant to a court order.


4. Mandatory Compliance
The bank has no discretion whether to comply.
Failure to obey a garnishee order may expose the bank to liability for contempt of court and other legal consequences.


Accounts and Funds That May Be Attached
Generally attachable:
✅ Current account balances
✅ Savings account balances
✅ Fixed deposits that have become payable
✅ Debts due from the bank to the customer
Potentially not attachable or subject to limitations:
❌ Accounts with no credit balance
❌ Trust accounts where the debtor has no beneficial ownership
❌ Certain joint accounts, depending on ownership and applicable legal principles
❌ Funds that do not legally belong to the judgment debtor


Relationship with the Debtor-Creditor Principle
The rationale behind garnishee proceedings can be understood through the debtor-creditor relationship established in the landmark case of Foley v Hill.
The House of Lords held that:

• A bank does not hold deposited money as trustee for the customer.
• The bank becomes debtor of the customer.
• The customer’s right is merely a debt claim against the bank.

Because the customer’s account balance is legally a debt owed by the bank, the court may attach that debt and require the bank to pay it to the judgment creditor.


Critical Analysis
A garnishee order is one of the most effective judgment enforcement mechanisms in banking law because it allows a creditor to access money already held by a bank without having to seize physical assets from the debtor.
From the creditor’s perspective, garnishee proceedings provide a swift and practical means of recovering judgment debts. From the bank’s perspective, however, the order temporarily overrides certain contractual obligations owed to the customer, including the duty to honour payment instructions and maintain confidentiality.
The effectiveness of the remedy ultimately rests on the fundamental principle that a customer’s deposit is not trust property but a debt owed by the bank. Consequently, the court is able to intercept that debt and redirect payment to satisfy the judgment creditor’s claim.


Examination Summary
Garnishee Order = Court order attaching a debt owed by a third party to a judgment debtor.
In banking law:

• Bank = Garnishee.
• Customer = Judgment Debtor.
• Creditor = Judgment Creditor.
• Customer’s account balance = Debt owed by the bank to the customer.
• Court redirects payment of that debt from the bank to the judgment creditor.

Key Principle: A garnishee order operates because the banker-customer relationship is fundamentally one of debtor and creditor, as established in Foley v Hill.

​

Malaysian Banking Law – Banking Secrecy and Customer Confidentiality
Introduction
Banking secrecy is one of the most fundamental obligations imposed upon a bank in its relationship with customers. Customers entrust banks with highly sensitive information relating to their finances, assets, liabilities and transactions. The law therefore requires banks to preserve the confidentiality of such information.
The objectives of banking secrecy are:

• To protect customer privacy;
• To preserve confidence in the banking system; and
• To ensure that banking information is disclosed only in circumstances recognised by law.

In Malaysia, banking secrecy is principally governed by sections 132, 133 and 134 of the Financial Services Act 2013 (FSA 2013), which replaced sections 97 to 101 of the Banking and Financial Institutions Act 1989 (BAFIA).
Banking confidentiality is protected not only by statute but also by contract and equity. As a result, an unauthorised disclosure may give rise to:

• Criminal liability;
• Civil liability;
• Equitable remedies; and
• Regulatory consequences.

The courts have also clarified several important principles concerning:

• Ownership of confidentiality;
• Implied consent;
• Accidental disclosures;
• Extra-territorial disclosures;
• Disclosure compelled by law; and
• The admissibility of information obtained in breach of banking secrecy laws.

1. Statutory Duty of Banking Secrecy
Section 133 FSA 2013
Section 133 imposes a statutory duty of confidentiality upon:

• Financial institutions;
• Directors;
• Officers;
• Employees;
• Agents; and
• Former directors, officers and agents.

These persons must not disclose any information relating to a customer’s affairs or account.
The protection extends to:

• Account balances;
• Banking transactions;
• Financing facilities;
• Fixed deposits;
• Securities accounts;
• Credit information;
• Customer identities; and
• Any information acquired through the banking relationship.

Breach may result in:

• Imprisonment up to five years;
• A fine up to RM10 million; or
• Both.

2. Confidentiality as an Implied Contractual and Equitable Duty
Apart from statute, confidentiality is also recognised as:
An Implied Contractual Duty
The banker-customer contract contains an implied term that the bank will preserve confidentiality.
An Equitable Duty
Equity protects confidential information and may restrain actual or threatened disclosures through injunctions.
Important authorities include:

• Tan Eng Seong v Malayan Banking Bhd
• Wong Yeng Mun v CIMB Bank Berhad
• Tan Lay Soon v Kam Mah Theatre Sdn Bhd
• Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng

Tan Eng Seong v Malayan Banking Bhd [1997] MLJU 36
Principle
Disclosure of a customer’s banking information to his brother constituted a breach of the implied duty of confidentiality.
The case establishes that:

• Confidentiality is an implied contractual obligation.
• Family members are still third parties unless authorised.
• Nominal damages may be awarded even where actual financial loss is minimal.

Wong Yeng Mun v CIMB Bank Berhad [2010] MLJU 414
Principle
The bank mistakenly sent statements to an incorrect address where they were opened by the customer’s new wife.
The court held the bank liable.
The case confirms that:

• The privilege of confidentiality belongs to the customer.
• Negligent handling of customer information may amount to a breach.
• Banks must adopt reasonable safeguards to prevent unauthorised disclosure.

Tan Lay Soon v Kam Mah Theatre Sdn Bhd [1990] 2 MLJ 482
Principle
The court held that confidentiality belongs to the customer and may be waived expressly or impliedly.
Where a customer authorises sale proceeds to be used to discharge a bank charge, disclosure necessary to implement that arrangement is permissible.
The case demonstrates that banking secrecy cannot be used to defeat transactions authorised by the customer.


3. Extra-Territorial Effect of Banking Secrecy
Attorney General of Hong Kong v Zauyah Wan Chik & Ors [1995] 2 MLJ 620
Principle
Section 97 BAFIA was not expressed to have extra-territorial effect.
Therefore:

• Disclosure made in foreign court proceedings does not automatically create criminal liability in Malaysia.
• Witnesses compelled by foreign courts to give evidence may rely upon legal compulsion as a legitimate excuse.
• Banking secrecy is not absolute and must sometimes yield to the administration of justice.

4. Admissibility of Information Obtained in Breach of Banking Secrecy
One of the most important questions in banking secrecy law is whether information obtained unlawfully remains admissible as evidence in court.
This issue was considered in:
Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng & Ors [2000] 3 MLJ 401
and subsequently by the Court of Appeal in:
Lim Lean Heng v Wako Merchant Bank (Singapore) Ltd & Other Appeals [2004] 3 CLJ 9


Wako Merchant Bank (Singapore) Ltd v Lim Lean Heng & Ors [2000] 3 MLJ 401
Facts
The plaintiff had obtained a judgment against the first defendant in Singapore.
The judgment was subsequently registered in the High Court of Malaya.
To prevent the defendants from dissipating assets, the plaintiff applied for and obtained an ex parte Mareva injunction.
The injunction affected several bank accounts belonging to the defendants.
The existence and particulars of those bank accounts were discovered through investigations conducted by a private investigator engaged by the plaintiff.
The defendants argued that the information concerning the bank accounts had been obtained in breach of section 97 of BAFIA.
They contended that because the information was obtained unlawfully, it should be inadmissible and the Mareva injunction should therefore be set aside.


Held (High Court)
The High Court rejected the defendants’ argument.
The court held that Parliament enacted section 97 to protect the confidentiality of customer accounts by creating criminal offences for unauthorised disclosure.
However, Parliament did not enact any provision stating that information disclosed in breach of section 97 would become inadmissible in legal proceedings.
Consequently, the ordinary rules of evidence continued to apply.
Under Malaysian evidence law:
Evidence obtained illegally is nevertheless admissible if it is relevant.
Accordingly, information relating to the defendants’ bank accounts remained admissible despite the possibility that it had been obtained through a breach of banking secrecy laws.
The Mareva injunction therefore remained valid.


Judgment of Abdul Aziz J
The learned judge emphasised several important principles.
Banking Secrecy Creates Criminal Liability
Section 97 criminalised unauthorised disclosure.
A person who unlawfully disclosed customer information could be prosecuted.
Similarly, a person who knowingly made a further disclosure could also commit an offence.
The private investigator potentially risked criminal liability if he knowingly disclosed information that had originally been obtained in breach of section 97.


Parliament Did Not Exclude Admissibility
The judge observed that Parliament deliberately created offences for unlawful disclosure but did not enact any provision excluding such evidence from court proceedings.
Had Parliament intended to render the information inadmissible, it could have expressly stated so.
Since Parliament did not do so, the courts were not entitled to create such an exclusion.


Criminal Liability and Admissibility Are Separate Questions
The fact that disclosure may constitute a criminal offence does not automatically affect the admissibility of the information.
The disclosing party may face criminal consequences separately.
However, the evidence itself remains admissible if relevant to the issues before the court.


Legal Principle
The case establishes the following principle:
Information Obtained in Breach of Banking Secrecy Remains Admissible
Banking secrecy legislation creates criminal sanctions for unauthorised disclosure.
However, unless Parliament expressly provides otherwise, information obtained in breach of those provisions remains admissible in civil and criminal proceedings if relevant.


Lim Lean Heng v Wako Merchant Bank (Singapore) Ltd & Other Appeals [2004] 3 CLJ 9
Held (Court of Appeal)
The Court of Appeal dismissed the appeal.
The court reaffirmed that the appropriate remedies for breach of confidentiality lie in the law of equity.


Principle of Equity
The Court of Appeal explained that:

• Equity imposes an obligation upon recipients of confidential information.
• Actual or threatened disclosure may be restrained by injunction.
• Breach of confidence may give rise to damages.

However, cross-examination was not an available remedy to defeat the Mareva injunction in the circumstances of the case.


Significance of the Decision
The Court of Appeal reinforced the distinction between:
Confidentiality Obligations
A person who receives confidential information may be restrained from misusing it and may face liability for breach of confidence.
Evidential Admissibility
The fact that information was improperly obtained does not necessarily prevent a court from considering it as evidence.
The two issues are legally distinct.


Case Scenario: Illegally Obtained Banking Information
Facts
A creditor discovers through a private investigator that a debtor maintains RM5 million in several bank accounts.
The investigator obtained the information through an unauthorised source.
The creditor applies for a Mareva injunction to freeze the accounts.
The debtor argues that the information was obtained unlawfully and should therefore be inadmissible.


Solution
Applying Wako Merchant Bank:

• The disclosure may constitute a breach of banking secrecy laws.
• The persons responsible may face criminal or civil liability.
• However, the information remains admissible if it is relevant.
• The court may therefore rely upon the information in deciding whether to grant a Mareva injunction.

Critical Analysis
The decision reflects a balance between two competing objectives:
Protecting Customer Confidentiality
The law discourages unauthorised disclosure through criminal sanctions and civil remedies.
Facilitating the Administration of Justice
The courts are concerned primarily with whether evidence is relevant and reliable.
Excluding all evidence obtained through unlawful disclosure could permit wrongdoers to hide assets and frustrate justice.
The court therefore distinguished between:

• Punishing the wrongful disclosure; and
• Determining whether the information may be used as evidence.

Key Examination Principles
Banking Secrecy

• Protected by sections 132–134 FSA 2013.
• Also protected by contract and equity.

Tan Eng Seong Principle

• Confidentiality is an implied contractual duty.
• Disclosure to relatives may constitute breach.

Wong Yeng Mun Principle

• Confidentiality belongs to the customer.
• Negligent disclosure may create liability.

Tan Lay Soon Principle

• Confidentiality belongs to the customer.
• Consent may be express or implied.
• Disclosure necessary to implement an authorised transaction is lawful.

Zauyah Wan Chik Principle

• Banking secrecy legislation is not automatically extra-territorial.
• Disclosure compelled by foreign courts may not create criminal liability in Malaysia.

Wako Merchant Bank Principle

• Banking secrecy laws create criminal sanctions for unauthorised disclosure.
• They do not automatically render information inadmissible.
• Illegally obtained evidence remains admissible if relevant.
• Breach of confidence is addressed through injunctions and damages rather than exclusion of evidence.

Conclusion
Malaysian banking secrecy law protects customer information through statutory provisions, contractual obligations and equitable principles. Nevertheless, the courts have consistently recognised that confidentiality is not absolute. Cases such as Tan Eng Seong, Wong Yeng Mun, Tan Lay Soon, Zauyah Wan Chik, and Wako Merchant Bank demonstrate that while unauthorised disclosure may attract criminal sanctions, civil liability or equitable remedies, such disclosure does not automatically render the information inadmissible as evidence. The law therefore seeks to balance the protection of customer confidentiality against broader considerations of justice, commercial practicality and effective judicial administration.

​

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Relevancy of Certain Judgments in Probate, Matrimonial, Admiralty or Insolvency Jurisdiction [Section 35 BSA / Section 41 IEA]

​Introduction
Section 35 of the Bharatiya Sakshya Adhiniyam, 2023 corresponds to Section 41 of the Indian Evidence Act, 1872. Both provisions deal with the relevance and evidentiary value of final judgments, orders, or decrees delivered by competent courts exercising:

• Probate jurisdiction,
• Matrimonial jurisdiction,
• Admiralty jurisdiction,
• Insolvency jurisdiction.

Such judgments are not merely relevant facts but also operate as conclusive proof of certain legal statuses, rights, or obligations declared therein.
The provision is based on the principle that judgments determining a person's legal status or legal character should be binding upon the whole world (judgment in rem) and not merely upon the parties to the proceedings.

Meaning of the Provision
Section 35 provides that a final judgment, order, or decree of a competent court exercising probate, matrimonial, admiralty, or insolvency jurisdiction is relevant when it:

• Confers upon any person a legal character;
• Takes away from any person a legal character;
• Declares a person entitled to any specific thing;
• Declares a person entitled to a specific thing against all persons.

Such judgments become relevant facts in subsequent proceedings.

Judgment in Rem
The judgments covered under Section 35 are generally known as judgments in rem.
A judgment in rem:

• Determines the status of a person or property,
• Binds not only the parties but the entire world,
• Operates conclusively regarding the legal character declared by the court.

Jurisdictions Covered under Section 351.
Probate Jurisdiction
Probate courts deal with:

• Wills,
• Succession,
• Administration of estates.

Example:

• Grant of probate declaring a will to be valid.

2. Matrimonial Jurisdiction
Matrimonial courts deal with:

• Marriage,
• Divorce,
• Nullity of marriage,
• Judicial separation.

Example:

• A decree of divorce declaring dissolution of marriage.

3. Admiralty Jurisdiction
Admiralty courts deal with:

• Ships,
• Maritime disputes,
• Maritime property.

Example:

• Determination of ownership of a vessel.

4. Insolvency Jurisdiction
Insolvency courts deal with:

• Bankruptcy,
• Insolvency proceedings,
• Rights of creditors and debtors.

Example:

• Adjudication of a person as insolvent.

Conclusive Proof under Section 35
A judgment falling within this section constitutes:
Conclusive Proof of:

• Legal character conferred,
• Legal character taken away,
• Rights declared by the judgment.

The Court shall regard such matters as proved and shall not permit evidence to disprove them.

Legal Significance
The provision promotes:

• Finality of judicial decisions,
• Certainty of legal status,
• Stability of legal relationships,
• Prevention of repetitive litigation.

Once a competent court determines a person's legal status, that determination cannot ordinarily be re-litigated.

Changes under the BSA
Section 35 BSA substantially retains the principles contained in Section 41 IEA.
The changes are primarily:

• Drafting improvements,
• Modernized language,
• Simplified document structure,
• Minor terminological modifications.

There is no major substantive departure from the earlier law.

Difference between Section 35 BSA and Section 41 IEASection 35 BSA

• Retains the same legal principle.
• Modernized and simplified drafting.
• Improved document formatting.
• Uses contemporary legislative language.

Section 41 IEA

• Contained identical substantive provisions.
• Drafted in older legislative style.
• Reflected traditional evidentiary terminology.

IllustrationSuppose a competent matrimonial court grants a decree of divorce between A and B.
In a later proceeding:

• The fact that A and B are divorced need not be proved again.
• The decree itself is relevant and operates as conclusive proof of the dissolution of marriage.

Similarly, if a probate court grants probate of a will, the validity of that will is conclusively established against the world.

Important Points (Note Form)

• Section 35 BSA corresponds to Section 41 IEA.
• Deals with judgments in rem.
• Applies to:
  • Probate jurisdiction,
  • Matrimonial jurisdiction,
  • Admiralty jurisdiction,
  • Insolvency jurisdiction.
• Such judgments are relevant facts.
• Operate as conclusive proof.
• Bind not only parties but the whole world.
• Promote certainty and finality in legal status.
• BSA mainly introduces drafting and formatting improvements.

Conclusion
Section 35 of the Bharatiya Sakshya Adhiniyam, 2023 continues the well-established principle that final judgments, orders, and decrees passed by competent courts exercising probate, matrimonial, admiralty, or insolvency jurisdiction are relevant and constitute conclusive proof of the legal character or rights declared therein. While the substantive law remains unchanged from Section 41 of the Indian Evidence Act, 1872, the BSA presents the provision in a more modern and streamlined form, ensuring clarity while preserving the doctrine of judgments in rem.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Opinions of Experts [Section 39 BSA / Section 45 IEA]
Introduction
​Section 39 of the Bharatiya Sakshya Adhiniyam, 2023 corresponds to Section 45 of the Indian Evidence Act, 1872. Both provisions deal with the admissibility and relevance of expert opinions in matters requiring specialized knowledge beyond the understanding of ordinary persons.
Courts often encounter issues involving technical, scientific, or professional subjects. In such situations, the opinion of a qualified expert becomes relevant and may assist the Court in arriving at a just conclusion.
The BSA retains the traditional categories of expert evidence while significantly expanding the provision to expressly include electronic and digital evidence.

Meaning of Expert Opinion
An expert is a person who possesses:

• Special knowledge,
• Skill,
• Training,
• Experience,
• Professional expertise,

in a particular field.
When the Court has to form an opinion upon matters requiring such specialized knowledge, the opinion of an expert becomes a relevant fact.

Matters on which Expert Opinion is Relevant
Under Section 39 BSA, expert opinions are relevant regarding:

• Foreign law;
• Science;
• Art;
• Identity of handwriting;
• Identity of fingerprints;
• Other specialized fields requiring expert knowledge.

The Court may rely upon expert testimony to understand technical matters beyond ordinary human experience.

Electronic and Digital Evidence – Major Change under the BSA
One of the most significant additions under Section 39 BSA is the express recognition of expert opinion relating to electronic and digital evidence.
The section provides that where the Court has to form an opinion regarding:

• Information transmitted through a computer resource;
• Information stored in electronic form;
• Digital records;
• Electronic communications;
• Computer-generated data;

the opinion of an Examiner of Electronic Evidence referred to under Section 79A of the Information Technology Act, 2000 is a relevant fact.

Examiner of Electronic Evidence as an Expert
The BSA expressly clarifies that:
An Examiner of Electronic Evidence shall be deemed to be an expert.
This explanation removes ambiguity regarding the status of such examiners and grants statutory recognition to their opinions.
Their expertise may be sought in matters involving:

• Digital documents,
• Electronic records,
• Cybercrime investigations,
• Computer forensics,
• Data recovery,
• Authentication of electronic evidence.

Importance of E-Evidence under Section 39
The express recognition of electronic evidence reflects the growing importance of:

• Digital transactions,
• Electronic communication,
• Online business activities,
• Cybersecurity,
• Information technology.

Modern disputes increasingly involve:

• Emails,
• WhatsApp messages,
• Social media communications,
• Server logs,
• CCTV footage,
• Digital records.

Expert assistance is often necessary to determine their authenticity and reliability.

Difference between Section 39 BSA and Section 45 IEA
Section 39 BSA

• Retains traditional categories of expert evidence.
• Expressly recognizes electronic and digital evidence.
• Recognizes Examiner of Electronic Evidence as an expert.
• Adapts evidence law to technological advancements.
• Broader and more modern in scope.

Section 45 IEA

• Focused primarily on:
  • Foreign law,
  • Science,
  • Art,
  • Handwriting,
  • Fingerprints.
• Did not expressly recognize electronic evidence experts.
• Was framed before the digital era.

Purpose of the Provision
The provision aims to:

• Assist Courts in understanding technical matters.
• Improve accuracy in judicial decision-making.
• Facilitate admissibility and evaluation of electronic evidence.
• Ensure that technological developments are effectively accommodated within the legal system.

Illustration
Suppose a dispute arises regarding the authenticity of an email or a computer-generated record. The Court may seek the opinion of an Examiner of Electronic Evidence to determine:

• Whether the record is genuine,
• Whether it has been altered,
• Whether it originated from a particular device or system.

Such opinion becomes a relevant fact under Section 39 BSA.

Important Points (Note Form)

• Section 39 BSA corresponds to Section 45 IEA.
• Deals with relevance of expert opinions.
• Expert opinion relevant regarding:
  • Foreign law,
  • Science,
  • Art,
  • Handwriting,
  • Fingerprints.
• BSA expressly includes electronic and digital evidence.
• Opinion of Examiner of Electronic Evidence is relevant.
• Examiner of Electronic Evidence is deemed an expert.
• Reflects modernization and technological advancement.
• Supports admissibility and authentication of e-evidence.

Conclusion
Section 39 of the Bharatiya Sakshya Adhiniyam, 2023 modernizes the law relating to expert evidence by expressly recognizing electronic and digital evidence and granting statutory recognition to Examiners of Electronic Evidence as experts. While preserving the traditional framework of Section 45 of the Indian Evidence Act, 1872, the BSA expands its scope to address the realities of the digital age, ensuring that courts are equipped to deal effectively with technologically complex disputes and electronic records.