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Nordea Bank Concludes Panama Papers Probe

by Ulrika Lomas,, Brussels

22 July 2016

Following an internal investigation, Nordea Bank S.A. has announced that its Luxembourg unit did not encourage clients to evade taxes by establishing corporate structures registered offshore.

Nordea's President and CEO, Casper von Koskull, initiated the investigation in response to the Panama Papers affair but concluded that Nordea Bank S.A. in Luxembourg (NBSA) "has adhered to internal rules and external regulations regarding activities related to offshore structures."

The investigation, undertaken with the assistance of Swedish law firm Mannheimer Swartling, focused on offshore structures either administered by the law firm Mossack Fonseca or incorporated in Panama, or both, and which had a customer relationship with NBSA as at April 15, 2016. It was found that, on this date, 129 out of a total of 562 clients with offshore structures satisfied these conditions. Total assets under management in these 129 vehicles amounted to EUR216m (USD238m). Five of the structures had beneficial owners resident in the Nordic region (Denmark, Finland, Iceland, Norway, and Sweden).

A total of 137 accounts were included in the tax part of the investigation, covering the period from 2010 to 2016, although some of these accounts had been closed by April 15, 2016.

The investigation concluded that while NBSA offered administrative services to these clients, there was no evidence that the bank's employees helped establish the offshore structures, "nor that they have proactively contributed to customers' potential tax evasion."

Nevertheless, Nordea said that 68 customer files "require further analysis" to confirm that the beneficial owners of offshore structures have adhered to Nordea's policies regarding tax evasion in accordance with a Code of Ethics drawn up by NBSA in 2009. Most of these cases refer to the period before 2013, it said.

In addition, the bank reviewed 21 Private Banking customers (five in NBSA and 16 in Nordic Private Banking) resident in the Nordic region and found that five cases need further investigation.

Nordea put these down to lapses in its know your customer due diligence processes. Mannheimer Swartling's investigation also concluded that "deficiencies exist related to the governance and control structures in NBSA."

Commenting on the outcome of the probe, Von Koskull said: "Group Compliance and Group Operational Risk have done a very robust investigation where approx. 60 persons have spent more than 30,000 hours going through more than 10,000 documents to get all facts on the table."

"The investigation shows that Nordea in Luxembourg at an early stage introduced new, stricter policies and standards regarding tax compliance in 2009, long before this was market practice or required by law. This was complemented by training programs and hiring of tax competence."

"However, I'm disappointed that the investigation shows that the implementation was insufficient. That is not acceptable. The deficiencies are, to a large extent, of a governance and control nature. Even so I'm comforted by the conclusion that no evidence has been found that Nordea employees have proactively contributed to tax evasion."

"I want to be absolutely clear. We do not accept Nordea being used as a platform for tax evasion or aggressive tax planning. Nordea is the largest bank in the Nordic region and has a special obligation to be a good corporate citizen. Taxes are mandatory, and tax compliance by corporates and individuals is critical for society at large. We recognize that following the letter of the law only is not enough. We must adapt to our stakeholders' expectations and the norms society has today to earn our customers' trust."

TAGS: individuals | compliance | tax | tax compliance | Denmark | Iceland | training | law | banking | employees | Luxembourg | Norway | offshore | tax planning | Finland | Sweden | standards | regulation | Panama | services | Compliance | Banking | Tax

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