Breach of Bank Secrecy for Purpose of Investigating Fraud in Brazil

Bank secrecy is a conditional agreement between a bank and its clients that all foregoing activities remain secure, confidential, and private.

During the investigation of the famous Watergate affair that brought down US President Richard Nixon in the 1970s, the suggestion of the then Associate Director of the Federal Bureau of Investigation (FBI), William Mark Felt, can be summed up in the following phrase: “Follow the Money”.

Since 2001 Brazilian judges are expressly authorised to trace the movement of money in bank accounts for the purpose of investigating not only criminal offences, but any illegal acts. Article 1, paragraph 4 of Complementary Law no. 105/2001, deals with the investigation of unlawful acts, without any specification of a criminal or civil nature, provided that the breach of secrecy is authorised in judicial proceedings.

The Superior Court of Justice confirmed that “any judicial proceedings may allow the breach of secrecy, with no restrictions made as to the nature of the alleged offence (civil or criminal)”, in Special Appeal no. 1.275.682, judged in 2011.

In an application for disregard of separate legal personality, access to the bank transactions of the parties may “elucidate the possibility of confusion of assets”, in the words of Justice Roberto Maia, of the Appellate Court of the State of São Paulo, in the judgment of interlocutory appeal no. 2244220-75.2017.8.26.0000.

Following the money is the most efficient way of detecting transfers, expenditure and receipts that constitute the confusion of assets and deviation of purpose between persons remitting and those receiving the money. And the best legal tool for obtaining this evidence is the so-called breach of bank secrecy.

As stated by Justice Roberto Maia, “the constitutional protection of bank secrecy should not be used by judgment debtors who try to take advantage of it in order to avoid payment of their debts”. This means that the strict rules governing bank secrecy have been attenuated in favour of other constitutional principles, such as access to justice, procedural effectiveness and reasonable duration of the proceedings.

Preservation of the privacy of persons under investigation may be guaranteed through measures that can be adopted judicially. Note the provision of art. 773 of the Code of Civil Procedure: “When, as a result of the provisions of this article, the court receives secret data for the purpose of enforcing judgment, the judge shall adopt the necessary measures to ensure confidentiality”.

The Federal Constitution, when providing for the fundamental guarantee of privacy (art. 5, X and XII), also provides for the principle of access to justice, whereby no threat or injury to a right may be excluded from judicial review. On weighing up these fundamental guarantees, fraud, procedural bad faith and attacks on the dignity of justice cannot be tolerated, and if there is evidence of money being hidden, it is possible to request judicially that bank secrecy be broken.

Luiz Adolfo Salioni Mello
Associate lawyer in the Civil Area – São Paulo