Swedish Credit Union as Deposit Taking Institution for Members
Sweden has a long history of innovative and alternative financial institutions. One of these is a unique type of credit union. Such a Swedish credit union with a 1000 member limit is fully capable of taking in deposits and comes without any type of capital requirements. This entity is registered in the form of an ekonomisk forening as it is known in Swedish which means economic association.
Financial services can only be offered to members and such financial services are normally restricted to the accepting of deposits and the making of loans to its members. In other words it would typically be expected to operate as a traditional savings and loan institution with the capitalization originating through member “contributions”. However, it is feasible that such an entity could also issue guarantees (c.d’s for example) as well as other financial instruments.
The Economic Association is exempted from the bank license requirement if these “financial services are offered to a group of entrepreneurs with a common financial interest”. The common financial interest is established by making the entrepreneur a member of the association. The name of the entity cannot include the word “bank”, but names including “Credit Union”, “Savings” or “Savings & Loan”, “Sparkassa” etc. are all allowed. Members can be of any nationality, but if requested the names of all members may be reportable to the finansinspektionen (Swedish finance and banking authority). In practice this would only be required if the activities of the credit union had been brought to their attention as potentially violating Swedish banking laws.
However, even in that situation, only names with no other identifying information (such as passport id) are required. Directors (minimum 3) can also be of any nationality, although at least 50% of the board of directors must be technically residents of the European Union (although in practice an EU mailing address would suffice since there are no residency checks or tests made by the Swedish registration authority).
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