Thursday, October 30, 2014

Data Privacy - UBS Banker Fined for Handling Data

All financial institutions should keep in mind that the data they are handling is protected by both banking secrecy laws and data privacy laws in which regulators can enact upon them with regards to the protection of client information. In certain cases, data privacy laws can even be used as an alternative to banking secrecy laws to protect the confidentiality of client data.

For former UBS banker, Renzo Gadola, who had pleaded guilty in the U.S. in 2010 to conspiring to defraud the Internal Revenue Service, things took a turn for the worse. Upon his arrest, Gadola started working alongside U.S. officials providing insight into fellow bankers and final institutions in Switzerland which offered offshore banking services. Gadola, who was sentenced to five years' probation and fined USD100 for his 2010 misconduct, handed over protected Swiss bank account data to the U.S. in 2011. This, in turn, resulted in further troubles for him, as his actions of handling over the two sets of bank account information to U.S. authorities was in breach of Swiss data privacy laws. However, Gadola was found to not have breached banking secrecy laws because he was not employed by the bank from which the clients' data originated from.

He was fined CHF 5,000, suspended two year's probation and ordered to cover the legal fees of the trial totalling CHF 7,117 for breaching the Swiss law of economic espionage.

Godola had, at the behest of U.S. authorities, breached laws of the authority of one country, while trying to cooperate with the authority of another country. Therefore, this shows that there is a need to accommodate the laws of both authorities before corrective action can be taken for cross-border cases such as this. It is important to differentiate the application of different laws between different jurisdictions pertaining to data privacy.

In retrospect of data protection laws coming into force in various jurisdictions, most notably in Singapore in July this year and the unified General Data Protection Regulation to be adopted by the European Union later this year, banks and other financial institutions are under increasing scrutiny over the protection and privacy of information of their clients. Such a unique case has shed a different light on data protection laws, in particular, like the one that was enacted in Singapore recently.

No comments:

Post a Comment