Where an institution outside Sweden deals with a client or a counterparty located in Sweden, those activities will typically be subject to Swedish laws and regulations. The service provider will need to consider whether they are triggering a local Swedish licensing obligation and whether they are complying with Swedish marketing rules.

In relation to marketing, Swedish laws regulate the issuance of “financial promotions,” which is defined as an “invitation or inducement” to engage in an investment activity. The decisive issue is whether or not a service is directed/offered to the Swedish market. Thus, if a service provider is approached by a client abroad on such client’s own initiative (reverse solicitation), it does not matter if the transactional documents are sent to the client’s address in Sweden. Correspondingly, if Swedish entities/persons are targeted via marketing or a webpage in Swedish, services will be seen as offered irrespective of whether any agreements are entered into in Sweden.

Under European laws, institutions established outside the European Economic Area (EEA) are called “Third Country Firms” (TCF). Until recently, European laws have not sought to harmonize the approach of member states to TCFs. This has meant that access to the markets of member states had to be considered on a case-by-case basis. However, the trend in European legislation is now towards harmonizing the approach across all member states to TCFs. On the one hand, this approach is likely to create a barrier to entry to European markets. On the other hand, institutions who become compliant with new EU standards will be able to access the whole EEA market, as opposed to having to consider the market on a country-by-country basis.

Certain exclusions are presently available under Swedish law, which enable TCFs to deal with clients based in Sweden. This is on the basis that the activities in question will be regarded as being carried on outside the territory of Sweden and therefore not subject to Swedish laws, or because a specific exemption will cover the activities.

By way of example, the following activity is regarded as being carried on outside Sweden and therefore not subject to Swedish regulation (although providers of these services will still need to consider Swedish marketing restrictions):

• The activity of accepting deposits is regarded as being carried on where the deposit funds are accepted. Where a Swedish person credits funds to a bank account held outside Sweden, the foreign bank where the individual holds the account will not be regarded as accepting deposits in Sweden. A Swedish resident can, therefore, hold an account with an offshore bank without the bank contravening Swedish laws, provided that the client relationship was established on the basis of reverse solicitation. Some financial promotion rules, which impose some limitations on marketing offshore bank accounts to Swedish customers, will apply to this activity.

  In other cases, the activities might be deemed to be carried on in Sweden and subject to Swedish laws.

  Some EU legislation, particularly the following, will limit the ability of foreign institutions to do business in Sweden:

• The Alternative Investment Fund Managers Directive imposes limitations on non-EEA persons marketing fund interests to persons in Sweden (and other European jurisdictions).
• MiFID II (comprising a recast of the Markets in Financial Instruments Directive and a European regulation), entails greater restrictions on TCFs conducting business in Sweden.
• Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) entails certain requirements and obligations for insurance providers as regards to distribution of insurance products and services in Sweden.