It is an implied term of the contract between a banker and his customers that the banker will not divulge to third persons, without the consent of the customer express or implied, either the state of the customer’s account, or any of his transactions with the bank, or any information relating to the customer acquired through the keeping of his account, unless the banker is compelled to do so by order of a Court, or the circumstances give rise to a public duty of disclosure, or the protection of the banker’s own interests requires it.

The leading authority on this subject is the case of:

Tournier v. National Provincial and Union Bank of England. (1924)

A brief record of the facts:

Tournier had an overdraft with the defendant bank. He had arranged to make payments toward the reduction of the overdraft, but after only three installments ceased to make further payments. Tournier was the payee of a cheque drawn by Woldingham Traders Ltd. Rather than deposit the cheque in his account with the defendant bank; he indorsed the cheque to a customer of the London City and Midland Bank. The defendant bank came to know about the cheque by virtue of the fact that Woldingham was a customer. Once the cheque was presented for payment, the manager rang the appropriate branch of the London City and Midland Bank to enquire as to the identity of their customer. It was learned that the endorsee was a bookmaker, a person who accepts and pays off bets.

The manager then rang the employers of Tournier and had conversations with two of the directors. The actual contents of that conversation are not clear, but it was alleged that the manager informed them that Tournier was having dealings with a bookmaker. As a consequence of that communication, the employer refused to renew Tournier’s contract of employment. Tournier sued both in defamation and for breach of contract. He lost at first instance and appealed with respect to both heads primarily on the grounds that the judge had instructed the jury erroneously. He succeeded in the Court of Appeal with respect to both claims, the Court ordering a new trial and Tournier eventually won the case.

Judge Bankes L.J stated that “In my opinion it is necessary in a case like the present to direct the jury what are the limits and what the qualifications of the contractual duty of secrecy implied in the relation of banker and customer.  There appears to be no authority on the point.  On principle, I think that the qualifications for customer’s information disclosure can be classified under four heads:

  1. Where disclosure is under compulsion by law;
  2. Where there is a duty to the public to disclose;
  3. Where the interests of the Bank require disclosure;
  4. Where the disclosure is made by the express or implied consent of the customer”.
He goes on to say, “the duty of secrecy does not cease the moment a customer closes his account. Information gained during the currency of the account remains confidential unless released under circumstances bringing the case within one of the classes of qualifications I have already referred to.  Again the confidence is not confined to the actual state of the customer’s account it extends to information derived from the account itself.”

In the words of Judge Scrutton J, “it is an implied term of banker’s contract with this customer that the bank shall not disclose his account or the transaction relating thereto except in certain circumstances.  The circumstances in which disclosure is allowed are sometimes difficult to state. I think it is clear that the bank may disclose the customer’s account and affairs to an extent reasonable and proper for its own protection (as when a bank is collecting or suing for an overdraft), or to the extent reasonable and proper for carrying on the business of the account as in giving a reason for declining to honour cheques when there are insufficient assets or when ordered to answer questions in the law courts or to prevent frauds or crimes”. 

Lord Atkins observed that the implied legal duty towards the customer to keep secret his affairs does not apply to knowledge which the bank acquires before the relation of banker and customer was in contemplation or after it ceased or to knowledge derived from other sources during the continuance of the relation.  The banks can by express agreement provide for circumstances when the bank may be at liberty to disclose”

The exemptions above to disclose customers’ information are explained below:

1. Disclosure under Compulsion of Law

a) Court Order

  •  Order to inspect entries in the Banker's books
  • To assist police with their enquiries
  • Evidence for foreign trials

b) Request from an authorised officer of the government

  • For instance from Kenya Revenue Authority

c) Bank liable to prosecution if information is not revealed

  • Information in the course of professional business or employment. The person knew, suspected or had reasonable grounds for suspecting that person is engaged in money laundering. The disclosure is made as soon as practicable after the information comes to the discloser

d) Where the law compels the bank to disclose information and it is an offence not to do so

  • It is an offence to fail to report a person's engagement in any kind of illegal money laundering when the information is acquired in the course of business if the defendant has knowledge or suspicion or reasonable grounds or suspicion
  • No offence is committed if the information is disclosed as soon as is reasonably practicable after the information come to the person's knowledge or there was a reasonable excuse for non-disclosure. It is also a defence for legal advisers if the information arose in privileged circumstances.

2. Disclosure in the Bank’s Interest

Reason for dishonouring cheques due to say, insufficient funds or signing mandate.
Bank disclosing information to a spouse for good course. See case: Sunderland v Barclays Bank Ltd (1938)

3. Disclosure with the Customer’s Consent
It is now common for banks to request customers for permission to give a reference.

This case has been applied in Kenya under INTERCOM SERVICES LIMITED & OTHER V. STANDARD CHARTERED BANK LIMITED CIVIL CASE NO. 761 OF 1988  E.A. L. R 2002 VOL. 2 391.

Facts of the case:

Judgment of Visram J.
The facts in this case are that a Mr. James Kanyita Nderitu was a director of 4 companies: Intercom Services Ltd, Inter State, Swiftair and Kenya Continental Ltd.  In 1985 Mr. Nderitu received a cheque for 17 Million shillings drawn by Kenya Revenue Authority, customs and excise department in favour of his company, Intercom Services Ltd. He banked the cheque on a Saturday in Standard Chartered Bank, Westland branch. It was obvious the cheque represented a substantial amount of money in 1988. The account was relatively new having been opened some 8 days prior to the depositing of the cheque. The bank accepted the cheque without raising any questions as it appeared to be proper on the face of it. The cheque was specially cleared and on the following Monday the Bank manager telephoned Mr. Nderitu and informed him that his superiors thought the deposit was somewhat unusual and he was requested to provide some documentary proof of payment from KRA.

Mr. Nderitu obliged and produced a payment voucher from the Customs & Excise department, for money paid under the Export Compensation Scheme. The bank noticed from the payment voucher what it considered significant discrepancies on the payment voucher. The amount shown in words in the payment voucher did tally with the amount shown in figures. This raised eyebrows at the bank. The bank commenced a series of enquiries.  The first enquiry was to Kenya Commercial Bank (KCB). KCB confirmed that the cheque was good to pay. Stanchart later called KRA. The first signatory affirmed the cheque is good for payment. They still called the second signatory who confirmed that the cheque was legitimate and it was good to pay. The bank still felt the transanction was fraudulent. They reported the matter to the fraud prevention section at the Central Bank of Kenya. Mr. Nderitu was arrested and charged with a criminal offence for obtaining money by false pretences. All his bank accounts were frozen.  He was acquitted by the court.

Mr. Nderitu brought an action against the bank for disclosing his account affairs to third parties hence violating its duty of confidentiality. Visram J. found the bank guilty of violating its duty of confidentiality.

Banking Act Cap 488 Laws of Kenya directs the manner and situations where information relating to a customer can be disclosed. Credit bureaus duty and conduct has also been outlined in the Banking Act Section 13. Section 14 of the act deals with confidentiality of customers’ information.

Banking Act Cap 488, Laws of Kenya
Kenya Law Resource Center blog

Godfrey Chege
Senior Accountant, Dreamcatcher Productions Limited
CPA, BBM (Moi University, Finance and Banking)


  1. Section 14 does not mention anything to do with confidentiality between a bank and a customer


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