Maritime International Advisor

BRITISH BANKS FORCED TO HAND OVER OFFSHORE ACCOUNT INFORMATION

BRITISH BANKS MAY HAVE TO GIVE UP ENCRYPTION KEYS

London, July 2006 - In our last Newsletter, we brought you the startling information that the UK Revenue & Customs was now able to seize account information held by OFFSHORE British banks on UK based computers.

Now, we learn that the UK intends to activate Part 3 of the Regulation of Investigatory Powers Act (RIPA) to give them the power to force banks, individuals and organizations to disclose encryption keys.

The legislation is already included in Part 3 of the RIPA, passed in 2000. Part 3 was never implemented due to the opposition at that time. The Government says that it now needs Part 3 in order to combat terrorists, pedophiles and other criminals. Such powers however, are already included in the current anti-terrorism legislation, at least for terrorist suspects.

The move has security experts alarmed, although Part 3 is still in a consultative process. They warn that the power to force banks to give up their encryption keys for banking transactions could endanger the security and confidentiality of accounts in British banks...

Security experts warn that the power to force banks to give up their encryption keys for banking transactions could endanger the security and confidentiality of accounts in British banks. And even more worrisome, is how such keys would be protected from hackers and criminal gangs operating on the internet, for such valuable keys would be a No 1 target. Such keys would also be worth a fortune and an ever present attraction to corrupt those having access to and/or knowledge of the keys.

Under such circumstance would not British banks consider moving their banking computers elsewhere, say to Switzerland?

There is also the danger to international businesses operating in the UK. They too, would apparently be required to give up their keys to their international communications and accounts if required to do so. This would certainly give pause to any large businesses thinking of placing their international HQ in the UK.

It is not just the loss of personal privacy that is worrisome. We are all aware, I am sure, that one of the fastest growing crimes in the world is identity theft. Bank and credit card accounts, social security numbers, etc are all valuable items to criminal gangs, not to mention the possibility of actually gaining access to bank accounts. Inadequate protection of encryption keys, legitimately seized, could cause major damage to many innocent individuals and businesses.

No one would deny the Government the tools to control the plague of terrorism and serious crime. It would, however, seem to us that there is a Pandora’s Box of problems in Part 3 of the RIPA and we hope that the UK Government will give serious thought to these problems, in the Part 3 consultative process.

If you wish to diversify your holdings to hedge against potential threats to your privacy and assets, consider an offshore company and corporate bank account.

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