The ocean industries are important for Norway, and for DNB. DNB has customers across the world in these industries, including countries that are far away from Norway.
In its article series "Paradise Papers", the Norwegian daily newspaper Aftenposten wrote on 5 November 2017 that DNB has granted loans to several companies registered in Bermuda. The companies are mainly involved in shipping and offshore activities.
Aftenposten also writes that the law firm Appleby has assisted DNB as legal adviser in connection with the establishment of some of these loans.
DNB has received several questions concerning these loans and the services provided by Appleby. This article contains information about the key topics in this discussion.
DNB is a leading shipping bank
The ocean industries are international industries that are important for Norway, as well as for DNB. It is well known that DNB is a leading international shipping bank, and the fact that we have customers all over the world is therefore nothing new.
Many companies within shipping and offshore have chosen to establish business in Bermuda. The companies themselves must explain the reasons for this.
As far as we have been able to document, DNB has not given any form of tax advice to our customers in this matter. Nor have the customers' accounts been established in Bermuda, but in Norway and other countries where we have operations.
We are very aware of our obligations as a bank. First, we shall know our customers and who is the ultimate beneficial owner. Second, we shall monitor the transactions that are executed and know the origin of the funds. Third, we shall report the correct tax information. This is part of our role in society.
With effect from 2016, tax information is automatically exchanged between most countries in the world, including Bermuda.
DNB uses local lawyers when granting loans to foreign companies
When DNB approves loans to companies registered outside Norway, we use local law firms to ensure that all the formalities relating to the company and the loan are in order, and that collateral for the loan is legally established.
We do this in all countries outside Norway, as the various countries have their local regulations.
Appleby is one of the law firms that have provided such services to DNB, for instance in Bermuda.
To prevent tax evasion and money laundering, an international reporting system has been introduced, resulting from an initiative by the Organisation for Economic Co-operation and Development (OECD).
The agreement on international tax reporting implies that Norwegian and foreign authorities exchange relevant information, such as where people are resident for tax purposes, i.e. which country they should logically pay taxes to.
Tax reporting across countries was carried out for the first time in the 2016 fiscal year.
However, Norway and Bermuda have had an agreement on such information exchange since 2009, which has now been automated.
DNB’s efforts to combat financial crime
DNB and other banks have developed and automated their work on tax reporting both in Norway and internationally. The same applies to initiatives to prevent money laundering. This is a comprehensive and important effort, and an important part of the bank’s role in society.
Tax evasion is regarded as money laundering, and DNB has one of the largest divisions for anti-money laundering in the Nordic region.
Since 2015, DNB has worked according to a three-year targeted action plan to prevent money laundering and the financing of criminal activity. So far, DNB has spent over 400 man-labour years and NOK 215 million to obtain new and updated information from customers.
DNB’s measures in the wake of Panama Papers
The case described in Aftenposten on 5 November differs significantly from the so-called "Panama Papers" case from 2016.
Back in 2016, Aftenposten referred to the fact that DNB’s subsidiary in Luxembourg had helped around 40 customers establish companies in the Seychelles in the years between 2006 and 2010.
DNB has acknowledged that the bank should not have helped establish these companies for Norwegian tax payers, as these structures could be used for tax evasion.
Now, the newspaper has documented what can be described as the core business of an international financial services group, i.e. the servicing of international customers in different countries in the form of loans and other financial services.
DNB has implemented several measures and changes after the so-called "Panama Papers" case in the spring of 2016. The measures shall ensure that the bank's operations are in line with regulations and the expectations of its shareholders, customers, and society at large.