The bank guarantee in minutes

[Kim P. Nyberg]

No, this one is not called “Understanding the bank guarantee in minutes”, because not many people other than politicians seem to sympathise with it. We would prefer to see it abolished altogether, as it serves no real purpose.

But until we can get it through the heads of the politicians, we must live with it. The authorities call it a financial guarantee.

In 2024, the guarantee amounts to DKK 113.823,30. It is intended to prevent us from going down to the municipality and begging for cash benefits, etc.

Firstly, we'll look at how it is provided and then we'll go through some of the problems associated with it.

You can only provide the guarantee via a bank, savings bank, or co-operative bank. In the following, the collective term will be “bank”. You can provide it as either a demand guarantee or an escrow account.

A demand guarantee means that the bank provides the guarantee on your behalf, and you pay a fee to the bank every three months for them to manage it for you. The fee is DKK 400-600 depending on the bank. A demand deposit requires credit approval.

An escrow account means that you have all the money, deposit them in an account in which the municipal council of the municipality has a mortgage in. This means that the account is not accessible to you, only to the municipality, which may access it only if they should have had expenses on you or your spouse.

When your spouse passes the A1 test, DKK 22.764,66 (2024 rate) is released, and when your spouse passes the A2, another DKK 11.382,33 (2024 rate) is released. If your spouse passes A2 within 6 months, the two amounts are added together.

If your spouse has already passed both tests before your family reunification, the bank guarantee is initially reduced by DKK 34.146,99 (2024 rate) in round figures.

Finally, the bank guarantee will be reduced by a further DKK 11,382,33 (2024 rate) when your spouse has passed all six language test under the Act on Danish courses for adult foreigners. 

The remaining amount will remain in the account until it has been active for 10 years. After that, the balance will be released to you if you have deposited the money.

You have three weeks to provide the guarantee. Then the municipality must confirm to the Immigration Service that they have received the guarantee and only then will the residence permit card be issued. All in all, it can easily take a couple of months.

The problems with this are practically queuing up:

You are REQUIRED to provide a bank guarantee, and you can ONLY do it through a bank. But banks are not obliged to help you. So, they can reject you if they want to. This means that banks can actually decide who you can live with in this country. And especially IF you can live here with your spouse.

You don't have to use your own bank but can freely choose to go to another one. The problem here is that many banks will not help you if you have all your other activities in other banks. Therefore, you may find that many banks will send you back to your own bank.

It can be very challenging to be allowed to make a deposit. Anti-money laundering laws simply stand in the way. Banks must make sure that the money doesn't come from anything shady. And we have seen several examples where even if people have their documentation 100% in order, they were still denied opening an escrow account with reference to the Anti-Money Laundering Act. This makes escrow accounts a purely hypothetical option. We have specific knowledge of a single case where a citizen contacted all the banks in the kingdom as well as the Danish Financial Supervisory Authority, all of which flatly rejected the person in question. They were therefore forced into the EU rules instead.

NOTE: This requirement does NOT apply to you if you submit an AO1 application.

[Kim P. Nyberg]

This post has been edited by today's date.