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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 is registered in a country that is part of the EU, and even more
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 that
could provide the leverage and capitalization to launch other additional off-balance sheet
business and investment activities.
The Economic Association is exempted from any license or registration requirements if these
"financial services are offered to a group of entrepreneurs with a common financial interest".
These “entrepreneurs” or potential members therefore should belong to a private closed group
with a common interest who would become members of the credit union. It is not a suitable
entity for offering any type of financial service to the general public. If services are offered to the
general public it would be required to register with the Swedish Financial Services Authority,
Finansinspektionen (FI) in accordance with the Deposit Taking Act. This Act limits the maximum
deposit per customer to SEK 50,000.00 (approximately USD 7,000.00). Since a CU registered
with FI would not be attractive for most people, we always recommend that the CU be set up in
such a way so as to not be subject to the requirements of the Deposit Taking Act which means
not marketing to and accepting deposits from the general public.
The name of the entity cannot include the word "bank", but names including "Credit Union",
“Savings” or "Savings & Loan", “Building Society”, "Sparkassa" etc. are all allowed. Members can
be of any nationality. 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).
1. This entity is registered in Sweden, a full European Union member and a highly respected
2. There is no annual license fee to pay, since the entity is exempted from license requirement.
3. There are no qualification or paid up capital requirements since capital is derived from
1. High tax levels. Sweden is obviously not a tax haven, and the association would have to pay
30% tax on any reported profit. One way around this is to use this entity together with a
Panamanian licensed payment processing company or other offshore vehicle, in order to
accumulate profits in Panama or another offshore jurisdiction rather than in Sweden. (This
company could also offer payment services like e-currency and credit/debit card services to the
credit union members, or be a lending and investment arm).
2. The finansinspektionen are strict in their enforcement of the narrowly defined deposit taking
and lending services allowed by an ekonomisk forening. For instance a website for such an entity
that appears to be offering banking and investment types of services similar to that of a bank will
attract their attention quickly with the requirement of either applying for a banking license or
drastically modifying the activity. Any credit unions not able to meet the stringent requirements
and paid-in capital requirements (with its resulting regulatory burden) of a Swedish banking
license would be required to immediately cease and desist all offending activities or face the
consequence of the credit union being forcibly dissolved and possibly face other legal action.
Our Guidance and Recommendations
Based on our collective experience in forming and operating such entities since 1999, we have
found that one of the best applications for this credit union is for the offering of financial services
to a pre- existing client/membership base. This avoids the whole problem attendant to soliciting
for members via a website (and being constrained by the very narrow definition of what can be
offered as a result), since the whole principal that the Swedish law on economic associations is
founded is that it presumes members will share certain pre-existing common economic interests
that tie them together in some way.
For setting up “correspondent” accounts for Credit Unions we do not recommend banks in
Sweden, due to their general money laundering paranoia plus the possibility of tax complications
in a high tax country resulting from deposits flowing through such an account. However, we can
recommend some very good banks in the Baltic States (the largest of whom are majority owned
by Swedish banks) as well as in Denmark. All these countries tend to offer better banking
privacy and more flexible multi-currency operations. In general these banks will have to be
visited in person.
However, through a special arrangement with a multi-national South-East Asian owned bank in
Central Europe, we can offer a full service EUR/USD account with no reference letter
requirements and no personal visit required. This bank is a SWIFT member and offers a
complete package of business banking services. As far as we know we are the only company
offering a guaranteed bank account opening rather then simply an account with a non-bank wire
payment service. This is important because many people have come to us who have been
unsuccessful in finding an account for their credit union.
We can offer a number of very competitively priced packages including the optional combination
of a licensed Panama financial services company, as well as assistance in opening up
correspondent bank accounts, debit card options and online banking software resources.
Assistance with compliance and operations are also offered. This might include responding to
Swedish tax office requests, the establishment of an office, virtual or otherwise in Sweden and
the provision of nominee directors.
Summary of what we offer:
CU registration certificates and by-laws in Swedish and English
All registration documents are legalized with apostille and two sets are provided.
Certificate of authorized activities
Two copies of this document are included in the above mentioned documents and it certifies the
exemption from the bank license requirement and can be helpful in bank account openings.
Guaranteed bank account opening with Central European Bank
Not just a wire clearing service but a fully functional correspondent bank account with IBAN and
SWIFT/BIC with accounts in major currencies such as EUR and USD. No reference letters or
personal visit are required for this service.
Debit card issuing
Generic or private label card programs available on your own merchant loading platform.
Minimum order for generic is 1000 cards for a total start up cost depending on the issuing bank
(a number of options are available) of around $10,000 to $15,000. Private label programs
require a minimum order of 5000. Per card cost at this volume level can be as low as $5 per card
depending on the bank. European banks are more expensive then their counterparts in the
Americas because of the devaluation of the USD but usually offer more currency options.
Online banking software is available.
Directors must provide photocopies of government issued photo ID. Half or more of the directors
must provide a European Union mailing address including that of the managing director who will
be considered to be the main decision maker.
There are no other document requirements beyond this. All final documents which includes
certification of its deposit taking status and articles of association are delivered within about 6
weeks and come with certified and apostilled English translations to make it easy to open
non-Swedish bank accounts.
Payment terms are 50% up front and 50% upon completion of the registration procedure where
scanned copies of the main legal documents will be sent.
Note that we usually have available unused “shelf” credit unions available for immediate use.