THE BANKING SECRET IN BOLIVIA

DEFINITION OF BANKING SECRECY.- Defined as the protection that banks and financial
institutions must grant to the information on deposits and movements made by their clients.
Likewise, this is also seen as a power that a financial entity has, vis-à-vis public
administrations, not to reveal the banking data and private information of its clients.

BANKING OPERATIONS THAT ENJOY BANKING SECRECY.- Although financial

intermediation is the primary activity that is protected by the application of banking secrecy, it
should be mentioned that banking secrecy is an institution of greater magnitude, and is not
subject to specifically to financial intermediation, but also to accessory operations, related to
financial activities, which involve confidential data about the clients of such entities.
The existing duty of confidentiality on the part of financial entities refers to all information that is
handled as a result of banking activity. It enjoys special protection, since it has a private
nature, that is, it cannot be publicized by the bank. When talking about this duty, personal data,
accounting information, financial balances, transactions carried out, and all types of documents
and information that are in the hands of the entity and that can be seen about a client based on
the banking activity must be considered.
On this point, it is worth highlighting that in our legislation regarding banking secrecy no
difference is made between: a) Passive operations (which serve for banks to form reserves to
credit) and b) Active operations, (which function to produce resources for the bank for the
purpose of making a profit by extending loans, securities and so on).

BACKGROUND OF BANKING SECRECY IN BOLIVIA.-

In our country we can briefly cite certain regulatory events linked to banking secrecy:
1) The General Banking Law of 1928.- The “duty of reserve” arises.
2) The Political Constitution of the State of 1967.- The right to privacy takes shape as a
fundamental right inherent to the human person and his personality.
3) The Basel Committee.- international organization dedicated to the discussion of aspects
related to banking supervision
4) The participation of the State in the International Conference on Human Rights held in
Tehran (Iran), on November 10, 1975, where the concept of the right to privacy is
established.
5) The Law of banks and financial entities (law 1488 of April 14, 1993).- In its Art. 86
establishes the Institute of Banking Secrecy.
6) The Law of the Central Bank of Bolivia of October 31, 1995.- In its Art. 80 establishes
responsibilities and scope of the obligation to maintain secrecy of matters and
operations of the BCB and the Financial Entities.
7) On March 10, 1997, law number 1768 (law of modifications to the criminal code) was
promulgated and included the criminal and administrative regime for the legitimation of
illicit profits, which created the financial investigations unit (UIF).
 8) Law No. 2297 of December 20, 2001, Law to Strengthen Financial Regulations and
Supervision. - introduces the creation of Credit Information Bureaus.
9) On March 31, 2010, Law No. 004 “Law to combat corruption, illicit enrichment and
investigation of Fortunes Marcelo Quiroga Santa Cruz.- Article 19 of which establishes
the “Exemption of Secrecy and Confidentiality”.
10) The Financial Services Law (Law 393 of August 21, 2013).- Establishes the regime for
lifting confidentiality.

FOUNDATION OF BANKING SECRET.-

This “duty of confidentiality” in charge of the Financial Entities arises in two interrelated
parameters, which are: a) The obligation of “professional secrecy” in charge of the Financial
Entity, and b) The “right to privacy” of financial clients as an enforceable power of compliance.

For the first case, it is justified because the applicable regulations oblige the official of the
Financial Entity (under responsibility) to keep confidential the information in his charge even
after his service, reaching this obligation to non-permanent official personnel but that the
Financial Entity acts through it.

With respect to the right to privacy, it is possible to interpret Art. 25 of the Political Constitution
of the Current State, which refers in paragraph II:

“Correspondence, private papers and private statements contained in any medium are
inviolable; these may not be seized except in cases determined by law for criminal
investigation, by virtue of a written and reasoned order.” of competent judicial
authority.”(…)

This constitutes the fundamental pillar of the assertions about the right to privacy. Despite this,
we must take into consideration that it is not directly what institutes banking secrecy
specifically, since said work was carried out by the legislator in an intrinsic manner in various
regulations:

First of all, we can cite article 1307 of the Commercial Code (Decree Law No. 14379 of
February 25, 1977), which stipulates:
"(Banking secrecy). Banking and credit institutions will keep due secrecy about the
operations they carry out and the information received from their clients. Banking and
credit entities and their officials who violate this provision will be jointly and severally
liable for the damages caused thereby, unless they must reveal such secrets by order of
the judge within a trial with the corresponding precautions and by well-founded request
of the control administrative authority. . The information exchanged between banks and
credit institutions among themselves also enjoys banking secrecy.”(…)
Likewise, the law on banks and financial entities (law 1488 of April 14, 1993), establishes in its
Title Sixth Chapter I, the institute of the “Banking Secret”:
 Art. 86.- “Banking operations in general will be subject to banking secrecy. No
background information relating to said operations may be provided except to the
owner, or to the person who legally represents him or her.
Art. 88º.- “The directors, trustees, managers and alternates of: 1. are obliged to keep
secret the affairs and operations of the financial system and its clients, which come to
their knowledge in the exercise of their functions. Financial intermediation entities. 2.
Central Bank of Bolivia. 3. External audit companies 4. Risk assessment companies. 5.
Related companies of financial entities.
Art. 89º.- The Superintendent and employees of the Superintendency, even after
ceasing their duties, are prohibited from disclosing information related to documents,
reports or operations of financial institutions or persons related to the financial system.
The official or employee who violates this prohibition will be removed from his position,
without prejudice to the corresponding civil or criminal responsibilities.
Art. 90º.- The Superintendency will provide the following information: 1. The list of
current accounts closed by writing checks without provision of funds. 2. The relationship
of debtors in execution of the financial system. 3. Non-personalized statistical
information about financial entities.

EXCEPTIONS TO THE LEGAL OBLIGATION OF CONFIDENTIALITY.-

A position that is gaining strength over time and internationally is to eliminate banking secrecy,
this to avoid the permanence of tax havens, and the ease of providing information on the
accounts of suspicious people and companies to avoid enrichment. illicit and capital flight to
tax havens.
The law on banks and financial entities (Law 1488 of April 14, 1993), establishes in its articles:
Article 87.- “Banking secrecy will only be lifted. 1. Through a reasoned court order,
issued by a competent judge within a formal process and expressly, through the
Superintendency. 2. To issue the reports ordered by the judges to the Superintendency
in judicial proceedings and in compliance with the functions assigned to it by the Law. 3.
To issue the reports requested by the tax administration on a specific person
responsible, who is in the process of a tax verification and provided that it has been
formally and previously requested. These reports will be processed through the
Superintendency. 4. Within the information that banking and financial entities exchange
with each other, according to reciprocity and banking practices. 5. To issue general
reports that are required by the Central Bank of Bolivia.”

CURRENT SITUATION OF THE BANKING SECRET IN BOLIVIA.-

Now, according to articles 472 and 473 of the current Financial Services Law, banking
secrecy no longer exists, but rather the confidentiality of information . According to
article 472: “Financial operations carried out by natural or legal persons, Bolivian or foreign,
with financial entities will enjoy the right of reserve and confidentiality.
Any information referring to these operations will be provided to the owner, to whom he
authorizes or to whoever legally represents him, in addition to the cases indicated in Article
473 of this Law."
In turn, Article 473 indicates that this reserve and confidentiality does not apply when it is
required by: judicial authorities; public authorities that investigate crimes, corruption, origin of
fortunes and illicit profits; tax authorities; the ASFI and the financial investigations unit.