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TBC Bank Promised Human Rights Center to Review Agreement Sample with Customers

February 4, 2011

Sopo Getsadze

Important and alarming changes were introduced by TBC Bank regarding the bank’s agreements with its customers. The customers’ concern focuses on three paragraphs listed in the agreement which entitles the bank the power to release information about the client to third parties without permission. It also entitles the bank to publish information about  clients who breachTBC bank’s agreement requirements, as well as the right to release information about their former clients and customers.

The customers were unable to understand the exact terms and conditions of the new agreement, so we offered to assist them in understanding the amended paragraphs through the use of our lawyers.

After reading the new amendments, Human Rights Center lawyer Nino Andriashvili posits that the paragraphs in the new agreement of the TBC Bank contract contradict the law of Georgia. More precisely, Paragraph 7.2 of the Agreement contradicts Article 863 of the Civil Code of Georgia, which states that credit institutions are obligated to keep secret the facts related to the account, or other facts made known to them in the course of business relations with the account holder. Paragraph 7.4 of the agreement contradicts Article 39 of the General Administrative Code and Article 17 Part II of the Law about Banks which state that No person shall be permitted to reveal a bank's confidential information about any person or to disclose, disseminate or use such information for personal gain.

Lawyer Beka Dochviri of the Georgian Young Lawyers Association told the Human Rights Center that when signing the agreement, a customer voluntarily agrees that the information preserved by the bank shall be accessible for other interested people. However, he added, the paragraphs dealing with the compliance of the agreement with the General Administrative Code, do not contradict the law. Dochviri said that the bank is a private company and the requirements of the General Administrative Code do not apply to them. In addition, the lawyer said that the agreement does not breach any law because paragraph 7.2 states that in “cases envisaged under the law” and in parallel with it, the customer accepts the agreement conditions by signing it.

Nino Andriashvili thinks that regulations estimated by the Administrative Code about personal information are valid for commercial banks too. In addition, the agreement conditions contradict not only administrative law but the Law of Georgia pertaining to Commercial Banks. Thus, if a customer appeals to the court, the agreement with TBC Bank might be annulled.

Representatives of TBC Bank clarified that the agreement was incorrectly interpreted by their audience. The bank wanted to demonstrate that they would preserve the confidentially of personal accounts not only during the account’s active existence, but also after its ceasing; they will only release information if the customer damages the reputation of the bank. The “third party” in the agreement refers to insurance companies, banks and the judiciary authority. This kind of cooperation has been implemented in practice for a long time and it cannot damage anybody.

The President of the Bank Association Zura Gvasalia spoke about the necessity of clarifying the “third party” TBC Bank agreement in his interview with the Radio Commersant. “Information about customers can be released only to financial institutions and the persons who cooperate with the bank based on the agreements. The list of these persons shall be clarified in the agreement. I would like to list them here: the Public Registration Agency, the Civil Registration Agency, the Credit Bureau; the banks provide them with data about the customer instead of details regarding their financial operations.”

Deputy Director General of TBC Bank Vano Baliashvili agrees with the necessity to clarify the “third party” in the agreement. He told the Human Rights Center that the Bank intends to make their agreement sample more thorough and clear to customers. “When it creates additional questions [and confusion], we will make it clearer and acceptable for customers.”

Representatives of TBC Bank say that the agreement sample was created in accordance to international standards. The Human Rights Center became interested in the international standards too and hence studied the conditions of the foreign bank HSBS which also has branches in Georgia. The HSBS agreement states that any information pertaining to the customer shall be released to a third person only when based on written permission of the customer. They also state that written permission is not necessary when the information is requested by public or regulatory institutions, or when the released information can prevent a crime and execute the request of the customer.

It is noteworthy that the amendments to the TBC Bank agreement coincided with the discussion of the draft-law – the so called ‘Patriot Act’ – initiated by MP Gia Tortladze. The draft law includes so-called lustration law and the Patriot Act itself. According to the draft law, the power of the MIA increases to guarantee more security for its citizens. When discussing the draft-law, MPs debated over the personal information that can be requested from the bank by police. Opposition parties and human rights organizations became concerned about this initiative. However, the parliamentary majority supports the draft law and voted for it at two sessions.

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