THE House Finance Committee yesterday agreed to change the proposed bill on banking confidentiality because in its current state it violates existing laws on the protection of personal data.
The final amendments will be made next Monday, after which the bill will eventually be tabled before Parliament.
Committee Chairman, Aristos Chrysostomou, said the Committee would modify the bill on banking confidentiality so that it could help fight tax evasion while remaining within the laws protecting personal data.
Last October, the Finance Ministry introduced a controversial tax bill partially to eliminate banking confidentiality and provide a tax amnesty to those who disclose secret accounts within a specific timeframe.
The idea was for commercial banks and co-operatives to disclose the banking details of all their clients on a six-monthly basis. The banks reacted immediately, arguing that no country in the world demanded this. They referred to banking confidentiality and the protection of their clients as reasons for their unwillingness to co-operate.
The proposal was modified accordingly, and the next suggestion was for the Central Bank to hold a Central Record, collecting the details of every single person in Cyprus with an account in a commercial bank or cooperative, again unprecedented.
The proposal was agreed in principle, until yesterday when the Commissioner for the Protection of Personal Data, Goulla Frangou, told the Committee this was a blatant violation of the laws on personal data.
For a body to collect personal data legally, they must have a specific aim and the consent of the person or at least reasonable suspicion of criminal activity. By having all the details of every bank client in one file at the Central Bank, the Inland Revenue (IR) has the opportunity to go on a “fishing exercise” without any specific aim, said Frankou.
DISY deputy Maria Kyriacou further argued that the existing law provided the Inland Revenue with the necessary right to demand information from banks on possible tax evaders.
Head of the Inland Revenue, George Pouffas, said the IR had already tried this numerous times but the banks would always refuse to give data, referring back to the principle of banking confidentiality.
The Committee agreed to remove provisions for the creation of a Central Record and instead provide the IR with the power to collect data from the banks directly. The final decision will be taken next Monday but the idea was raised yesterday to give the IR such a right only when they had “reasonable suspicion” of tax evasion. The Committee also discussed the possibility of providing penalties to banks that refused to provide such information.
