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Sweden

On July 1 2004 the new Act (2004:299) on Deposit Taking entered into force. The Act introduces a set of special requirements for non-financial institutions accepting deposits from the general public. The new Act is part of the modernization of the legislation on banking and financing businesses in Sweden and the abolition of the banks' monopoly on taking deposits.

The Act has been passed to enhance competition with regard to taking deposits and provide consumers with a greater variety of options when depositing their savings.

The new Act does not apply to deposit-taking activities carried out by companies covered by the Act (1995:1571) on Deposit Guarantee Schemes, that is, banks, credit market undertakings, securities companies and equivalent foreign undertakings. So the Act will only apply to non-financial institutions, which are not subject to supervision by the Swedish Financial Supervisory Authority (Finansinspektionen). Deposits with these entities will not be covered by the deposit guarantee scheme (non-guaranteed deposits). The associations that may take non-guaranteed deposits from the general public are limited liability companies (aktiebolag) and economic associations (ekonomiska föreningar).

A limited liability company or an economic association may only accept deposits on accounts from the general public if it has been registered with the Financial Supervisory Authority. To be registered, the company or association must comply with minimum requirements on restricted equity (SKr10 million ($1.3 million) for limited liability companies) as well as requirements regarding the entity's owners, its management and its auditors.

Under the Act, the deposit-taking entities must clearly inform their customers about the non-guaranteed nature of the deposits.

The maximum deposit per consumer is SKr50,000. The Act imposes no limit in relation to nonconsumers.

Entities involved in taking deposits under the new Act will be subject to Swedish money laundering provisions set out in the Act (1993:768) on Measures against Money Laundering.

Entities carrying out business under the new Act will not be subject to supervision by the Financial Supervisory Authority, but the Authority will monitor the companies registered under the new Act annually in relation to their compliance with the specific requirements set out by the Act.

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