The new forms of confidentiality and secrecy

The principle of privacy extends to net worth, considered to be a product of personality.

During a recent case relating to asset management, the French Court of Cassation reasserted that the protection of assets comprising net wealth pertains to the sphere of private life and penalised invasions thereof (Cass. 1e Civ: 6 October 2011)

This protection also pertains to professional secrecy including banking secrecy, which prohibits the communication of infor- mation from the accounts of one’s clients to third parties, bearing in mind however that banking secrecy as such does not exist in Monaco.

By the same token, other professionals such as lawyers, notaries and chartered accounts are bound to absolute confidentiality in respect of information and documents that come to their knowledge whilst practising their profession.

While recent case law (Cass. Com. 5 February 2015) reaffirmed judges’ propensity to restrict the scope of exemptions to banking secrecy, in cases where only private interests were at stake, the limits of secrecy surrounding the protection of identification of assets comprising net wealth are changing.

Without addressing the voluntary renunciation of secrecy, on the part of the person involved, a renunciation that, in some States, is not legally feasible, new exceptions are planned either by a public interest measure (e.g.: the criminal asset identification platform (PIAC) relating to illegal financial traffic and assets) or by legal measures (e.g.: laws, international treaties).

This is also the case with the new standard for exchanges of infor- mation produced by the OECD (“CRS”) which focuses on financial accounts, income from financial sources and life insurance contracts, of which financial institutions must provide, according to stringent conditions, information to their States.

This communication of information directly concerns the identification of assets and income arising from the net wealth of individuals and is a striking illustration of an exception to the principle of the right to secrecy mentioned in the introduction. Besides the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters signed by the Principality of Monaco on 13 October 2014, other OECD model agreements are used, including bilateral TIEA-type tax agreements, with the objective of achieving tax transparency and combating tax fraud.

Recently, the agreement between Monaco and Italy, signed on 2 March 2015, contributes to this global system, by establishing procedures for the exchange of information on request between the two countries, including the prospect of automatically exchanging of information in 2018.

Irrespective of the conditions provided for by these agreements, the demands of the right to data protection must be remembered for all taxpayers and nationals complying with their tax obligations. Article 21 of the above mentioned Multilateral Agreement sets out this protection and the limits to the obligation to provide assistance and Article 22 is a reminder of the rules in relation to secrecy.

Various points must therefore be regulated in exchanges of information, such as the guarantees of respect of confidentiality and the

assurance of the proper use of the information exchanged, reciprocity and the respect of the constitutional rights of the nationals of different States.

The mechanisms must be fair and protective of assets and persons, and will in all probability require changes to the internal law of the States concerned.

In the Principality of Monaco, it is important to remember the legal measures protecting personal data and their automated processing as established by Act No. 1160 of 23 December 1993 instituting the CCIN.

For its part, Article 308 (et seq.) of the Penal Code governs the professional secrecy of Monegasque bankers, even though it takes cognizance of exceptions resulting from tax agreements, the measures relating to ACPR and to SICCFIN.

In conclusion, the right to secrecy, like data protection, will create a new limit to the obligation to provide information resulting from international tax treaties and will in all likelihood necessitate changes to internal law.