Abstract

To many people in the international financial community, bank secrecy is not a new concept. Many countries, such as Switzerland and The Bahamas, have become attractive as international banking centers in part because of stringent bank-secrecy laws that protect the secrecy of financial information regarding bank customers. Since the 1930s, the number of countries that have adopted bank-secrecy laws has increased significantly. These laws have helped a number of countries to grow substantially in their international banking activities. For example, International Monetary Fund statistics indicate that from 1985 to 1986, international bank lending to offshore banking centers (as defined by the Fund staff) surged from approximately $39 billion to about $88 billion, while international bank deposit-taking from offshore banking centers increased from approximately $54 billion to almost $127 billion.1