International Fraud & Asset Tracing 2022 Comparisons

There are various provisions in Danish law protecting against fraud, including fraud in business relationships. The primary regulation is provided in the Danish Criminal Code, criminalising, inter alia, embezzlement, fraudulent deceit, breach of trust, fraudulent preference, bribery, and forgery. Generally, fraud claims are investigated by the police and the prosecution, which will also bring proceedings under criminal procedural law. In practice, however, offences are also frequently prosecuted in civil proceedings, usually with a claim for payment of damages to compensate for losses incurred as a result of the offence. It is possible, in principle, to be awarded damages in criminal proceedings. In many cases, though, the civil claim will be deferred to a separate trial. Fraud claims may also lead to claims under property law, and such claims may be pursued as part of the criminal proceedings or through civil proceedings.

Embezzlement

Cases of embezzlement include situations in which a person, to obtain an unlawful gain for themselves or others, appropriates tangible property in their possession or wrongfully spends money entrusted to them (see Sections 278(1)(i) and (iii) of the Criminal Code). Examples include cases where an accountant or finance assistant wrongfully transfers funds belonging to their employer or to customers to their own or another person’s account. The crucial element in embezzlement is that the person committing it is taking advantage of an opportunity to deal with property or funds. Fraud in the form of embezzlement therefore goes beyond employment relationships and includes transactions undertaken by others, such as advisers, agents, brokers, etc. Embezzlement is punishable by fine or imprisonment for a term of up to eight years.

Fraudulent Deceit

Fraudulent deceit encompasses situations in which a person, by creating, confirming or exploiting a mistake, induces another person to perform or fail to perform an act and thereby inflicts a loss on that or another person (see Section 279 of the Criminal Code). In practice, fraudulent deceit is categorised into different types, such as investment fraud, trade fraud, insurance fraud, credit fraud, and work-related fraud. Claims of fraudulent deceit are among the most common fraud claims. As well as the creation of a mistake, fraudulent deceit also covers cases where the perpetrator confirms or exploits an existing mistake. Fraudulent deceit requires an actual or threatened financial loss and is punishable by fine or imprisonment for a term of up to eight years. 

Breach of Trust

Breach of trust encompasses situations in which a person, to obtain an unlawful gain for themselves or others, acts contrary to the best interests of another person whose property has been entrusted to them for a specific purpose, and thereby inflicts, or causes a risk of inflicting, a financial loss on that other person (see Section 280(ii) of the Criminal Code). Actions over breach of trust are often brought against persons in managerial positions. Breach of trust is punishable by fine or imprisonment for a term of up to eight years.

Fraudulent Preference

Often closely connected to bankruptcy offences, fraudulent preference encompasses, inter alia, situations in which a debtor:

• wrongfully disposes of property belonging to them in which a third party has acquired an interest;
• sells assets after the commencement of bankruptcy proceedings against them; or
• by false pretences, concealment, pro forma transactions, large gifts, disproportionate consumption, sales at reduced prices, settlement of or the provision of security for liabilities not yet due, or in any other similar manner, withholds their possessions or claims from being used to satisfy any or all of their creditors (see Section 283 of the Criminal Code).

Fraudulent preference is punishable by fine or imprisonment for a term of up to eight years.

Bribery in Business Relationships

Danish law distinguishes between bribery in public and private sectors. Bribery of public officials is punishable by a fine or imprisonment for up to six years, whereas private-sector bribery carries a sentence of a fine or imprisonment for up to four years (see Section 299(2) of the Criminal Code). Bribery cases in the private sector are subject to conditional public prosecution, which means that a case will only be pursued by the police and the prosecution if it has been reported to them. Both the receipt (passive) and giving (active) of a bribe are covered by Danish regulation. In order for a bribe to be considered illegal, it must be in breach of the recipient's duty. Whether a bribe is in breach of the recipient's duty depends on the specific circumstances and the nature of the bribe. Receipt of a kickback in the form of money is undoubtedly a breach of duty, whereas receipt of other non-monetary benefits will require additional proof of a breach of duty. In practice, bribery rules cover both the receipt and giving of monetary and non-monetary benefits. By way of example, depending on the circumstances, return services and job promises may be deemed to be covered by the regulation.

Forgery

Under Danish law, a document is considered forged if the document or the content of the document does not originate from the purported issuer (see Section 171(3) cf (1) of the Criminal Code). This applies to both written and electronic documents. If a person uses a forged document to deceive in a legal matter, such forgery is punishable by a fine or imprisonment for up to six years. The concept of deceit implies that the document must have been significant in inducing an action or inaction of legal importance, or must have been suitable for that purpose. If the recipient of the document knew of the forgery in advance, the condition that the document must have been used to deceive in a legal matter would not have been met. However, even if the forgery has been poorly executed, this will have no impact on the question of whether the document is forged or has been used to deceive in a legal matter if the other conditions for punishment by reason of forgery are fulfilled. The use of forged documents is often one of the elements in the aforementioned cases regarding embezzlement, fraudulent deceit, breach of trust and fraudulent preference.

In addition to the regulation of fraudulent deceit in the Criminal Code, Danish law also contains other safeguards against fraud, including rules on contractual invalidity and damages.

As mentioned above, Danish law prohibits both passive and active bribery. This implies that, in addition to taking legal action against an employee or other persons who have acted on behalf of the claimant (such as agents or others) and who have received a bribe, a claimant will also be able to take such action against the person who has granted the bribe. Typical legal action may include a claim for payment of damages and/or reporting of the bribery to the competent authorities, accompanied by a claim for criminal prosecution. If the briber is a company, the claim may be raised against the company as a legal person, and possibly also against the liable person(s), provided that the conditions for liability are satisfied.

Under Danish law, legal action may be taken not only against the offender directly responsible for the offence but also against any person(s), including legal persons, who, without being directly involved, are complicit in the offence by inciting, aiding or abetting it. In assessing the potential liability of multiple persons, the general Danish rules on criminal complicity and on joint and several liability will apply. Typical legal action, for instance in cases involving bribery, may include a claim for payment of damages and/or reporting of the fraudulent act to the competent authorities, accompanied by a claim for criminal prosecution, if the conditions for criminal liability are fulfilled.

Subsequent Complicity

Generally, the rules on criminal complicity and joint and several liability apply only to prior acts or omissions. Subsequent complicity, ie, acts or omissions undertaken by others after the fraudulent act has been committed, will not be regarded as complicity, unless the assistance was agreed in advance or falls within the Danish rules on liability for possession of stolen goods or money laundering.

Possession of Fraudulently Obtained Assets and Money Laundering

Under Danish law, any person who fraudulently receives or procures for himself or others a share of the proceeds from a fraudulent act, or who fraudulently, by hiding, storing, transporting, assisting in the disposal of or in any similar manner, subsequently assists another person in securing the proceeds from a fraudulent act, will be deemed to be in possession of fraudulently obtained assets (see Section 290 of the Criminal Code). For this purpose, “proceeds” means the direct benefit obtained from the fraudulent act, for instance assistance in the disposal of stolen assets. If the subsequent assistance is provided in relation to money proceeds, the offence must be assessed under Section 290a of the Criminal Code dealing with money laundering. Money laundering includes conversion or transfer of any direct or indirect proceeds from a criminal activity for the purpose of hiding or disguising the unlawful origin of such proceeds.

Under Danish law, the complicity of a bank in transactions related to criminal activities will, as a general rule, be assessed under the special money laundering rules applying to banks – not the Criminal Code. The penalty for possession of fraudulently obtained assets and for money laundering is a fine or imprisonment of up to six and eight years, respectively.

Under Danish law, the limitation period varies, depending, inter alia, on whether the fraudulent act gives rise to civil or criminal liability. 

Limitation Period under Criminal Law

Under criminal law, the limitation period will reflect the penalty for the offence. The limitation period for fraud claims is typically ten years. However, the limitation period may be shorter in less serious cases, because the penalty in such cases is lower than those described in 1.1 General Characteristics of Fraud Claims. As a general rule, the limitation period will start running from the date of the offence and will be suspended by the bringing of charges against the offender.

Limitation Period under Civil Law

Under Section 3 of the Danish Limitation Act, any claim for damages against an offender will typically become time-barred after three years. The limitation period starts to run from the time when the damage occurs or the time when the claimant knew, or should have known, of the damage. If a claim for fraud is also pursued by the police or the prosecution, any claim for damages may be dealt with as part of the criminal proceedings. In this respect, Section 13 of the Danish Limitation Act provides that, in such cases, expiry of the limitation period will not bar any claim for damages against the offender as a result of the offence. Furthermore, such a claim may also be made by bringing a separate action within one year after the final decision in the criminal action, or within one year after the imposition of an out-of-court fine or other criminal law sanction on the offender.

The fact that the offender is no longer in possession of the proceeds from a fraudulent act is without prejudice to the possibility of confiscating an amount equal to those proceeds or seeking compensation for the loss incurred. If it is not possible to determine the amount of the proceeds, an estimate can be made. If the case concerns a proprietary claim, it will depend on the type of asset involved. The following applies in relation to real and movable property, claims, and investment securities.

Movable Property

In a ruling of 21 January 2020, the Danish Supreme Court found that A, who had lost his car through misappropriation, could claim that the car be returned by B, the bona fide buyer. Referring to the Danish Law of King Christian V 6-17-5, which entitles anyone whose asset has been stolen to recover that asset from a subsequent bona fide buyer, and to its previous decisions in the Swane cases, which also involved theft, the Court noted, inter alia, that it has been established that the initial owner enjoys an extensive right of recovery which can only be derogated from in exceptional cases. Derogation is subject to the initial owner acting with great carelessness or unreasonable acquiescence, for instance by not taking legal action to prevent a transfer after learning that there is an imminent risk of such a transfer.

Real Property

Rights over real property are regulated in the Danish Registration of Property Act. According to Section 27 of the Act, registered rights prevail over prior rights, provided that the new rights holder is in good faith. However, Section 27 also provides that any objection that the instrument is false or falsified, or that it has been drawn up by personal violence or threat of personal violence against the law, will be valid, also in relation to the bona fide buyer. Accordingly, if B has fraudulently convinced A to transfer his house to B, and if B has then, after registering the deed of conveyance in the Land Register, resold the property to C, who has registered the deed in good faith, then A will not be able to recover the house. If, however, the contract of sale between A and B had been entered into using personal violence, then A may recover the property.

Claims

Transfers of claims are regulated in the Danish Debt Instruments Act, which distinguishes between negotiable debt instruments and ordinary debt instruments. The transferee of an ordinary debt instrument will not enjoy better rights than the transferor. The opposite applies to the transfer of negotiable debt instruments. Thus, it follows from Section 14 of the Danish Debt Instruments Act that any absence of the right to transfer the debt instrument is without prejudice to the transferee’s right, unless the transferee knew this or failed to act with the diligence required by the circumstances.

Investment Securities

The transfer of investment securities is regulated by the Danish Capital Markets Act. Section 185 contains rules that are similar to the rules governing transfer of rights over real property.

Under Danish law, no special pre-action rules apply in cases involving fraud. However, Section 336a of the Danish Administration of Justice Act imposes an obligation on the parties to a civil action to seek to avoid unnecessary litigation and to explore the possibility of settling the dispute before taking legal action. If the parties fail to meet this obligation, they may be ordered to pay the costs caused by such a failure. The rule applies to civil actions – not actions where the claimant reports the defendant to the relevant authorities. Once a civil action has been brought, the court will convene a pre-trial hearing to allow the parties to present their views on the factual and legal circumstances of the case.

Under Danish law, a claimant who is the victim of fraud has various options to protect against the risk of concealment. In criminal actions, the relevant rules are the provisions on seizure in the Danish Administration of Justice Act, while the provisions on freezing orders and summary enforcement proceedings apply in civil actions. Concealment is categorised as fraudulent preference (see 1.1 General Characteristics of Fraud Claims).

Criminal Actions

A claimant who is the victim of fraud may, when filing a police report, ask the police to seize an asset to secure a claim for damages or a claim for restitution of an asset that has been appropriated from the claimant. If the police agree, they can apply to the court for a seizure order. Typically, a seizure order is issued against the defendant, but in certain circumstances it may also be issued against a third party. It is a condition that the defendant is reasonably suspected of having committed an offence which is being pursued by the police and the prosecution, and that a claim for restitution of an asset or payment of damages has been made. Where the purpose of the seizure is to secure a claim for damages against the defendant, it is also a condition that seizure is deemed necessary. If the ownership of an asset is uncertain, it may be seized, until a possible dispute over the ownership has been resolved.

A seizure order to secure a claim for damages will lapse if the defendant is subsequently adjudged bankrupt. Where seizure is undertaken with a view to restitution of an asset, it is not possible to deal with the asset contrary to the purpose of the seizure, neither by subsequent agreement nor by debt enforcement proceedings.

Freezing Orders

The rules on freezing orders allow a claimant to seek, on a civil law basis, the availability of funds to cover monetary claims, including damages. A request for a freezing order must be submitted by the claimant to the enforcement court in writing. The object of a freezing order can be both money and assets. The enforcement court may request provision of security for the harm and inconvenience caused by the freezing order, and it is a condition for maintaining the freezing order that the claimant, within one week of the freezing order, initiates court proceedings concerning the claim covered by the order, unless the defendant, during or after the freezing order, waives proceedings. A freezing order will lapse in the same way as seizure in the event of the defendant's subsequent bankruptcy.

Summary Enforcement Proceedings

If a claimant can prove or establish their ownership of an asset, the claimant may request assistance from the enforcement court in enforcing possession of the asset. The enforcement court may refuse enforcement proceedings if it finds such proceedings suspicious. The enforcement court may request provision of security for the harm and inconvenience that the proceedings will cause to the defendant. The security must be released after three months, unless the defendant has brought an action beforehand claiming abolition and compensation, in so far as such claims have not been raised in connection with an appeal against the decision issued by the enforcement court.

Under Danish law, a defendant is not generally required to disclose their assets in order to assist in identifying assets prior to a trial.

In the case of bankruptcy proceedings, the debtor is obliged to fully disclose their assets. If the debtor fraudulently withholds information about their assets in order to hide the assets from the creditors, the debtor may be held liable for fraudulent preference.

As described in 1.7 Prevention of Defendants Dissipating or Secreting Assets, it is possible to secure assets prior to a trial by means of seizure in criminal cases, and freezing and summary enforcement proceedings in civil cases.

Apart from under the rules in the Danish Bankruptcy Act and the Danish Administration of Justice Act, the defendant is not obliged to assist in securing assets prior to a trial.

Various publicly accessible documents contain information about real estate and other assets owned by the defendant. The police may also obtain information from the tax authorities on the defendant's income and assets.

Danish law allows for the issue of an order for disclosure and search to secure evidence, which is laid down in the Danish Administration of Justice Act.

Criminal Cases

During criminal proceedings, the police may secure evidence by means of a search at a suspect’s address, and disclosure and search at non-suspects’ addresses.

A disclosure order is only issued against non-suspects (persons, enterprises or authorities) and is considered to be the least intrusive intervention under Danish law. Since 1 February 2021, the police have had the authority to order some of the enterprises and persons covered by the Danish AML Act to disclose information about transactions, accounts, custody accounts, deposit boxes, etc. Other orders for disclosure are issued by the courts, ordering the person, enterprise etc in possession of a document or an asset to disclose it to the police if it can serve as evidence, should be confiscated or, in connection with the offence, has been appropriated from someone who can claim it back. The only additional requirement of disclosure is that the relevant investigation is part of the public prosecution. The police may also decide to issue a disclosure order if the purpose of the intervention would otherwise be lost.

A disclosure order cannot be issued against a person who is exempted or excluded from appearing as a witness.

A distinction is made between searches of premises or objects in the possession of a suspect and searches of premises or objects in the possession of a non-suspect. The distinction is not determined by ownership, as the concept of possession also covers rented or borrowed premises or objects. Searches can be carried out in both private homes and businesses.

The conditions for a search at a suspect’s premises are that the suspect is reasonably suspected of having committed an offence that is subject to public prosecution, and that the search is of essential importance to the investigation. In the case of searches of homes, residential premises, documents, papers, etc, as well as the contents of locked objects, it is a further requirement that the offence is punishable by a custodial sentence or that there are specific grounds for believing that it is possible to find evidence or objects that can be seized. The indication or suspicion requirements are increased in this respect; however, the requirements are still relatively low. A suspect may consent to a police search, but the indication, crime and suspicion requirements still need to be satisfied. If, during a search at a suspect’s premises, the police find written or similar communications with persons who are excluded from appearing as witnesses, eg, lawyers, doctors and ministers of religion, such communications may not be searched; however, they are allowed to search a suspect's notes about a meeting with a person who is excluded from appearing as a witness. 

In the case of a search at a non-suspect’s premises, it is a requirement that the investigation concerns an offence punishable by a custodial sentence. The indication requirement means that there are certain circumstances indicating that a search may reveal objects that can be used as evidence or seized; thus, the indication requirement is higher than for searches at a suspect’s premises. A non-suspect may also consent to a search, in which case the indication and crime requirements are waived, and the search may be carried out even if, for example, the offence does not carry a custodial sentence. Contrary to disclosure, it is possible to conduct a search of a non-suspect excluded from appearing as a witness; however, written and similar communications with the suspect may not be searched.

Civil Cases

In civil cases, a distinction is made between the opposing party's disclosure duty and a third-party’s disclosure duty.

At the request of a party, the court can demand the opposing party disclose specific documents in the latter's possession, which are deemed relevant to the case. If the opposing party fails to comply with the court's order for disclosure of documents, this may be prejudicial to the case, and the court may, in its assessment of the evidence, attribute prejudice to the opposing party. The duty to disclose documents at the request of the opposing party is subject to the same restrictions as the duty for a party to give evidence.

The court may, at the request of a party, order a third party to produce or disclose a document in their possession. A third party's duty of disclosure is equivalent to the duty of giving evidence. The party seeking a third-party disclosure order must describe the facts which the documents are intended to prove, and which are relevant to the case and the theme of the evidence. A disclosure order cannot be issued against a person who is exempted or excluded from appearing as a witness.

As stated in 2.2 Preserving Evidence, in both criminal and civil cases it is possible to order a third party to disclose documents for use as evidence.

The application for a disclosure order cannot be dealt with by the court until after commencement of the action (in civil cases) or commencement of the investigations (in criminal cases). Anticipated evidence is possible if, prior to the court action, there is a risk that important evidence will be lost, cannot be brought before the court without significant inconvenience or delay, or it is believed to be of importance for the investigation or for reasons of public interest. An example of the use of anticipated evidence is the questioning of a witness who is terminally ill, for which reason the opportunity to secure the evidence may be lost.

In cases involving infringement of IP rights, the enforcement court may, at the request of the rights holder or any other party entitled to take legal action against the infringement, order a search and seizure investigation at the other party’s premises for the purpose of securing evidence of the infringement. If prior notice of the search is likely to result in removal, destruction or alteration of evidence of the infringement, the enforcement court may decide not to give such notice.

In criminal law, the defendant's counsel must, as a general rule, be notified of all court hearings, including hearings held to obtain search warrants and orders. If the investigation is at such an early stage that no defence counsel has yet been appointed, only the police and the prosecution will participate at the hearings on seizure, disclosure and search orders. The orders may later be appealed. 

If there is a risk of evidence being destroyed, the court may decide, at the request of the police, not to inform the defendant and/or defence counsel of a court hearing. Similarly, a plaintiff in a civil action may request that the defendant not be informed of court hearings.

In cases involving fraud or other types of financial crime, the victim may ask the police and the prosecution to present their claim for damages during the criminal proceedings. The claim can also be presented by the victim during the criminal proceedings, if applicable following the victim’s testimony. The court may decide to hear the claim and award damages, if the court finds that the claim is justified and sufficiently clear. The court may also decide to refer the claim to the civil courts, in which case the victim will have to bring a civil action. In practice, the claims for damages will often be referred to a separate civil hearing. The action for damages may also be brought as a civil action running parallel to, and independently of, the criminal action. The civil action will, in some circumstances, be stayed pending a decision on the question of guilt in the criminal action.

In civil actions, the burden of proof is on the plaintiff; in criminal actions it is on the police and the prosecution. However, the defendant cannot prevent a case by failing to participate.

In criminal proceedings, it is possible to proceed with the trial hearing if the defendant does not appear. If a duly summoned defendant fails to appear without giving notice of lawful absence, the court may order that the witnesses summoned should be heard. If the defendant’s presence is deemed unnecessary by the court, the case may in some cases be set down for judgment despite the defendant’s absence. The case can be set down for judgment when the defendant has evaded after the indictment has been served to the person concerned. It is also possible to proceed with the hearing despite the defendant’s absence, if the defendant has left the court without permission after first appearing. If the defendant has agreed to a hearing of the case in his absence, the case may be set down for judgment only if the claim is for unconditional imprisonment for up to one year, confiscation, expulsion, disqualification, or compensation.

Additionally, the case may be set down for judgment despite the defendant’s absence if the maximum penalty is unconditional imprisonment for six months, or other legal consequences on the condition that a measure under Section 68 of the Danish Criminal Code shall remain the same as any previously imposed measure, confiscation, expulsion, compensation or disqualification under the Danish Road Traffic Act or the Danish Act on Safety at Sea. For such default judgment to be given, the defendant must have been duly summoned and informed that failure to appear may result in the defendant being convicted as charged. Finally, the court may proceed with the case despite the defendant’s absence if the court is satisfied that the defendant will be acquitted.

Danish criminal law is based on the principle of substantive truth, which implies that the authorities involved, including the courts, are required to reach the right decision. Accordingly, agreements between the defendant and the police and prosecution on the basis for the decision can only be made to a limited extent.

There are no special rules in Danish law governing claims against "unknown" fraudsters. It is possible to file a police report even if the fraudster is unknown. The police may initiate various types of investigations that could directly or indirectly identify the fraudster, including by obtaining legal assistance from foreign authorities and bank details from other countries. If the police are still unable to identify the fraudster, the case will be filed in the police systems. If new evidence emerges that can identify the fraudster, the case may be reopened.

In both criminal and civil proceedings, witnesses are called to give evidence in court. The sanctions for failure to appear in court will be stated in the witness summons.

If a witness fails to appear without lawful excuse or otherwise refuses to give evidence, the court may impose various sanctions on the witness to induce him or her to give evidence. If a duly summoned witness fails to appear in court, the court may have the witness picked up by the police. If the hearing has started without the witness appearing, the court may issue an arrest warrant against the witness, who will then be arrested and taken to the next hearing by the police. The court may also impose a fine on the witness, both for non-appearance and for refusal to give evidence despite appearance in court. The court may also impose a continuous fine for a maximum period of six months, if the witness continues to refuse giving evidence. Furthermore, the witness may be ordered to pay the expenses caused by his/her behaviour. Finally, the court may order the witness to be taken into custody by the police or subject the witness to measures. As an example, the witness may be ordered to submit to supervision, to appear before the police at specified times until the witness can give evidence in court, or until the witness agrees to answer or to take off any clothing concealing his or her face. However, the witness may not be held in custody for more than six months in the same case, continuously or cumulatively.

Under Danish law, legal action may be taken against any person liable for assisting in the commission of fraud, including any legal person. The liability of legal persons is detailed in Section 27 of the Criminal Code. According to that provision, it is a condition of the criminal liability of a legal person that the offence has been committed in the course of their activities, and that the offence was caused by one or more natural persons connected to the legal person, or by the legal person themselves. The provision regulates only the question of criminal liability. Whether a legal person is liable in damages depends on an assessment of whether as an employee they have acted atypically and unforeseeably.

Claims may be brought against the beneficial owners of legal persons if they have assisted in the commission of the offence by instigation, advice or action. However, the fact that they are shareholders or beneficial owners does not in itself make them liable for fraud which the company is deemed to have committed.

Sections 361–362 of the Danish Companies Act regulate in more detail the possibility for shareholders to decide that the company should bring claims against the management and others who have committed an offence.

It follows from Section 364 of the Companies Act that the decision to hold somebody responsible must be taken by a general meeting.

If the general meeting has granted discharge to the management, a new decision may be taken if it turns out that the management has not submitted substantially correct and complete information to the general meeting before the decision was taken.

Shareholders representing at least one tenth of the company capital who have opposed a decision to grant discharge may bring an action claiming that the person or persons responsible must pay damages to the company for the loss suffered. Shareholders that subsequently bring an action will be liable for the legal costs, but will be entitled to recover them from the company in so far as the costs are covered by the amount recovered by the company in connection with the action.

However, if a company is declared bankrupt and the reference date occurs within 24 months after the date of the general meeting that granted the discharge or waived the right to bring an action, the bankruptcy estate may bring an action for damages regardless of that decision. 

The jurisdiction of the Danish authorities covers offences that have been committed in Denmark or otherwise have a connection to Denmark, whether the offence has effect in Denmark or acts of attempt or complicity have been committed on Danish territory. If jurisdiction exists, Danish authorities will be able to deal with a case of fraud regardless of whether the perpetrator is resident or domiciled outside Denmark. A foreign company can be sued in Denmark if the fraud has been committed in Denmark, for example in connection with a business meeting that took place in Denmark. Danish law recognises extraterritorial jurisdiction to a limited extent only. 

As mentioned in 1.1 General Characteristics of Fraud Claims, cases of fraud are investigated and prosecuted by the police and the prosecution. Typically, such cases are initiated by filing a report. In addition, cases of fraud are dealt with by the civil courts, most often resulting in a claim for damages and/or return of the assets appropriated from the claimant. Large financial crime cases, including international fraud cases, are dealt with by the National Crime Unit. Other cases of fraud are dealt with by the police in the district where the fraud has been committed. 

The investigative steps typically taken in these cases include search, seizure and asset tracing.

With regards to asset tracing, Danish law provides that even after the conclusion of a case, the police may initiate investigations for the purpose of seizing and confiscating the proceeds of fraud. 

Danish law recognises the privilege against self-incrimination. When suspected of having committed a criminal offence, a defendant must be instructed that he or she has a right to silence. In police interrogations, it must appear from the interrogation report that the requirement for such instruction has been complied with. The burden of proof in criminal proceedings lies with the police and the prosecution, so there will be no adverse inference if the defendant refuses to provide information.

Danish law recognises legal privilege in both criminal and civil proceedings. The protection extends to the content of the advice given by the lawyer to the client, including written communications and memos prepared by the lawyer.

In practice, therefore, the police and the claimants will generally not be allowed to interrogate the suspect's lawyer.

When the police search the premises of a suspect, such a search must not include communications originating from the suspect's lawyer. However, the suspect's own memos are not protected from the search. If privileged material is not kept confidential, there is a risk that the material could be subject to a search or a request for disclosure. Thus, a report that has been written by a lawyer on a particular subject and forwarded to an independent third party is not necessarily protected against a subsequent disclosure request.

Danish law does not provide an opportunity to raise punitive or exemplary damages claims against a perpetrator.

Under Danish law, police and prosecution have broad powers to request information from banks and other financial operators in connection with criminal investigations. The relevant operators are then required to comply with the request, notwithstanding any duties of confidentiality.

The information that may be requested includes information on transactions, accounts, custody accounts, deposit boxes, etc. The police may also request the operators to disclose information available to them concerning transactions in accounts to which funds have been transferred, or in a transaction originating from a transaction covered by the request. It is a requirement that the police request is in writing and accompanied by reasons for the request.

Crypto-assets, including cryptocurrencies, are not separately regulated under Danish law.

In 2018, the Fifth Money Laundering Directive (5AMLD) was adopted, and has been implemented in the Danish Money Laundering Act. The Directive introduced regulation of money laundering through the use of “virtual currencies”, including cryptocurrencies. The regulatory approach of the Directive only addresses cryptocurrencies, not crypto-assets as a whole.

Despite the implementation and regulation of “virtual currencies” in the Money Laundering Act, crypto-assets are currently not generally recognised as electronic money under the Danish Payments Act (implementation of Article 2(2) of EMD2). Crypto-assets can, on the other hand, be regarded as assets.

The protection in Danish law against fraud is not negatively delimited and therefore also includes fraud relating to crypto-assets.

However, Danish law does not provide any aggregate protection of trade in crypto-assets, and Danish authorities warn, on equal terms with EU authorities, about the risks associated with such trade.

Section 169a of the Criminal Code prohibits any person from wrongfully making, obtaining or distributing false electronic money with the intention of spending it as genuine money. The provision does not currently cover crypto-assets, as crypto-assets are not recognised as electronic money under the Payments Act.

The very use of false electronic money or false virtual currencies will be treated as fraudulent deceit or data fraud.