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Finnwatch slams banks' reluctant reporting

Banks in Finland appear to be paying taxes as required but their tax reporting practices are lacking, according to corporate responsibility group Finnwatch.

Nordea OP Danske Bank -logot
Image: AOP

Finnwatch, a civic group focused on corporate responsibility in Finland and around the world, surveyed the tax details of Finnish banks from 2014-2017 and said it found major shortcomings.

Finnwatch said there was missing information in the banks' tax documents as well as errors. The group said the lack of transparency at the banks was a big problem.

For example, the source of the banks' hundreds of millions of euros in declared profits remain unclear, according to Finnwatch accounting expert Reijo Kostiainen.

"Banks that have been named in financial scandals should be pioneers in transparency, but despite this their tax reporting is at the base minimum level," Kostiainen said.

Denmark's Danske Bank, for example, was rapped by the group for allegedly reporting national tax data with huge variations in sums from year to year - without explanations. Finnwatch also scolded Danske Bank for involvement in an enormous money laundering scandal that has shaken up the Nordic banking industry.

"Danske Bank knew for years that its branch in Estonia has problems, but did not mention them in any annual report until the matter became public, thanks to the media," Finnwatch executive director Sonja Vartiala said.

"Now the firm has lost 40 percent of its market value in a year and Denmark has opened a preliminary investigation about its auditing practices," she said.

Nordea scolded too

The bank which fared best in the survey was OP Group, which Finnwatch said followed regulations most carefully.

However Nordea Bank, which recently was also implicated for involvement in the Danske Bank money-laundering scandal, was cited for its activities in tax havens.

Vartiala said that banks operating in Finland make the most profits in Ireland, Luxembourg, the United Kingdom, Singapore and the United States.

"Some of the profits the banks earned in tax havens can be connected to the tax planning services they offer in those countries," Vartiala said.

However, the banks do not appear to be doing the tax planning, which occurs through third-party partners.

Finnwatch recommended that authorities further expand the banks' tax reporting obligations, particularly their national income figures.

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