International Fraud & Asset Tracing 2022 Comparisons

The German Criminal Code captures the concept of fraud in a variety of criminal offences. Fraud is a concept that is also regulated by civil law – where fraudulent behaviour may affect the validity of a contract or form the basis of a damage claim. The following information aims to present an overview.

Criminal Law

Fraud

According to the German Criminal Code, fraud is committed by causing or maintaining an error under false pretences or by distorting or suppressing true facts with the intention of obtaining unlawful pecuniary benefits, and so damaging somebody else’s assets. The completion of the offence namely requires these elements:

• an act of deception;
• the deceived party’s misconception;
• a disposition of assets by the victim or third party; and
• resulting damage.

This fact pattern must be connected in a chain of causality. Deception can be committed explicitly, in implied behaviour or – in the case of guarantor status – omission. The deceived person’s misconception must provoke the disposition of assets. The element of disposal reflects this dogmatic characteristic: fraud is considered as an act of self-harm, but it is also possible that the deceived person causes a disposition of assets at the expense of a third party. In both cases the induced disposition of assets must mirror the benefit that the perpetrator intends to obtain. Depending on the severity of the offence and the circumstances, the law provides for a range of possible sanctions which range from a monetary fine to imprisonment for a term of up to five years, in the case of a conviction. Severe cases, such as commercial fraud, may lead to even graver punishments.

Further fraud offences

As mentioned above, the concept of fraud has a range of varieties expressed in different offences. Computer fraud was introduced into the Code as a separate offence to reflect technological particularities. Fraudulent conduct in the context of subventions, capital investment fraud, insurance fraud, obtainment of benefits by deception, credit fraud, sports betting fraud as well as the manipulation of professional sports competitions is covered by specific individual criminal offences that meet the dogmatic requirements of the respective behaviour. Hence, the significance of the phenomenon “fraud” in its naturally associated comprehension is reflected in a spectrum of subject-specific regulations.

Breach of trust

Besides the above, fraudulent behaviour can also be found in the offence of breach of trust (embezzlement). Whoever abuses the power to dispose of the assets of another or to make binding agreements for another, or whoever breaches their duty to safeguard the pecuniary interests of another which are incumbent upon them and thereby adversely affects the person whose pecuniary interests they were responsible for, incurs a penalty of imprisonment of up to five years or a monetary fine. The offence aims to protect the assets of the trustor and to prevent the misuse of a position of duty granted to the perpetrator by the trustor – ie, the damaging of assets can be classified as an act from within. It requires the existence of an upscale (qualified) fiduciary duty. Due to the – theoretically – unlimited scope of this concept, German judicature urges the investigation authorities and courts to apply rigourous requirements and a restrictive usage of it in practice.

Corruption

Accepting benefits/taking bribes

The German Criminal Code attempts to regulate the occurrence of bribery and corruption in their different forms and differentiates between the interaction with public officials on the one hand and commercial bribery on the other. The offences created in this context are divided into two categories (active and passive corruption) which form their respective counterparts. On the receiving end, public officials, European officials or persons entrusted with special public service functions, incur a penalty by accepting, or allowing themselves to be promised, a benefit for themselves or for a third party in return for the discharge of a duty. Similarly, judges, members of a court of the European Union, or arbitrators make themselves liable by demanding, allowing themselves to be promised, or accepting a benefit for themselves or a third party in return for the fact that they performed or will in the future perform a judicial act. In this context, it is sufficient that the benefit is granted in the context of the public service. If the benefit constitutes a specific, unlawful action of service, a qualification and more severe sanctions are triggered. On the active side, the law aims at and penalises citizens who promise, offer, or grant such benefits in return for the discharge of a service. The link between benefit and compensation requires the existence of an “unjustness agreement” (Unrechtsvereinbarung) – the specifics of which are the subject of controversial discussion.

Commercial bribery

In the field of commercial practice, bribery is committed by an employee or agent of business who demands, allows themselves to be promised or accepts a benefit in return for giving an unfair preference to another. Bribery can also be seen as breaching an incumbent duty by accepting or allowing to be promised a benefit in return for performing or refraining from performing an act in the competitive purchase of goods or services without the permission of the entrepreneur. The person that offers, promises, or grants such a benefit, or rather breaches the duty incumbent on the entrepreneur by offering, promising, or granting performance of or refrainment from competitive purchase, incurs a penalty just as the bribe-taker does.

False Statements

The Commercial Code also establishes offences involving false statements, such as inaccurate representation or the violation of reporting obligations. These offences are intended to protect public trust in the accuracy and completeness of the information regarding a company. The offences are designed as abstract strict liability torts and therefore do not require further results.

Civil Law

Despite the lack of specific regulations in the Civil Law Code on fraud, claims in the context of fraudulent conduct do exist. In the context of contracts, fraudulent behaviour towards the contracting party can lead to voidability on the grounds of deceit. Consequently, a person who has been induced by deceit to make a declaration of intent may challenge his declaration. If a third party commits the deception, the declaration is only voidable under the restriction that the intended recipient knew of the deceit or ought to have known of it. Furthermore, the deceived party may claim for damages caused by the conclusion of the void contract or demand asset recovery in the way of an unjust enrichment claim.

The claimant whose agent has received a bribe has the following causes of action available.

Actions within Criminal Law

As with any damaged party in a criminal scheme, the claimant is entitled to file a criminal complaint and support an investigation by submitting relevant information to the authorities. He can request access to the investigation file if he can bring forward a legitimate interest – for which an interest in exploring civil claims is sufficient. In case the perpetrator (or participant) of any offence (such as fraud, breach of trust, or bribery) has obtained benefits by committing the offence, the court orders the confiscation of whatever was obtained, including the proceeds.

Actions within Civil Law

An agent that takes a bribe does not act in the interest of his contractual partner. Fraudulent conduct triggers the desire for the contracting party to refrain from the contractual relation, for which the Civil Code offers different options.

The claimant can invoke the nullity of the legal transaction. Collusive agreements based on bribery violate statutory prohibitions and are contrary to public policy. Consequently, the entire legal transaction would be considered null and void.

Fraudulent behaviour may also lead to voidability of the transaction on the grounds of deceit. Whoever was induced to make a declaration by deceit can challenge on these grounds. If this right is asserted, the legal transaction will be regarded as having been void from its conclusion.

Furthermore, the deceived party may also claim for damages caused by the conclusion of the invalid contract or demand asset recovery in the way of an unjust enrichment claim. Considering the relevant contractual or statutory provisions relevant in each individual case, the damage caused by the agent’s breach of duty may be recoverable.

Criminal Law

Parties who assist or facilitate the fraudulent acts of the perpetrator may be punishable under the German Criminal Code. Criminal liability differs depending on the nature and extent of a party’s particular action.

Aiding and Abetting

A person who intentionally assists another in the commission of an unlawful act such as bribery or fraud is sanctioned as an aider and abetter. The penalty is determined in accordance with the penalty threatened upon the perpetrator, but the penalty may be mitigated. An aider is regarded as not having any authority of action but rather supporting the offence in a factual or psychological manner. Alternatively, a person who intentionally induces another to commit a fraudulent act is punished as an abettor and receives the same penalty as the offender. The impact of the abettor’s behaviour must evoke the decision of the offender to commit the crime.

“Supporting Offences”

Sometimes the actions which support the original offence fulfil an offence of their own. The “supporting” party therefore becomes an offender himself.

The offence of handling stolen goods regulates the culpability of whoever, for the purpose of personal enrichment or the enrichment of a third party, buys or procures by other means property which another offender has obtained for themselves or a third party by committing an offence against the property of another person, or disposes of or assists in disposing of such property.

Money laundering makes the concealment of unlawfully acquired assets punishable. The offence intends to penalise anyone who conceals an object resulting from an illegal act or who – with the intention of thwarting the discovery, confiscation or determination of its origin – exchanges, transfers or spends the object, procures it for himself or a third party or alternatively keeps or uses such an object with the knowledge of its origin.

Civil Law

Whoever assists or facilitates a fraudulent act can be made liable for the damage caused by the fraudulent conduct. If more than one person is responsible for the damage, they are jointly liable. In that case, the participants of the fraudulent conduct are seen as joint and several debtors and obliged in equal proportions in relation to one another, unless otherwise determined.

In cases in which a party’s assistance consists of the receipt of fraudulently obtained assets without further involvement in the fraudulent conduct, the victim of fraud may claim the recovery of the property (unless the recipient was able to acquire property in good faith) or compensation via the law of unjust enrichment.

Limitation periods and forfeiture do exist in both civil and criminal law.

Limitation Period for Criminal Prosecution

While there are a number of particularities regarding the start (and hence the end) of a limitation period, the legislation focuses on a general rule. The prosecution of a criminal offence is limited, and the limitation period for fraud – and, similarly, for most of the other offences mentioned above – is determined in accordance with the seriousness of the offence and the range of the penalty. In general, the limitation period runs out after three years. In severe cases, the limitation period is extended to five years (cf German Criminal Code, Section 78 paragraph 3 No 4, 5). The limitation period starts with the termination of the offence, which in respect of fraud is seen as the completion of the act as a whole, including that the benefit has actually been achieved.

Civil Law

As with any other civil claim, the claim for damages or unjust enrichment is subject to limitation. The standard limitation period runs out after three years. It starts at the end of the year in which the claim arose and in which the claimant obtains knowledge (or would have if he had not shown gross negligence) of the circumstances and of the identity of the obligor.

According to the Civil Code, the avoidance of a declaration of intent on the grounds of deceit may be asserted within one year. The period commences once the person entitled to avoid discovers the deceit. Nevertheless, this challenge is barred once ten years have passed since the declaration of intent was made.

The following rules apply in circumstances where a claimant seeks recovery of property misappropriated or fraudulently induced to be transferred.

The transfer of property ownership induced by the fraudulent conduct can be challenged. If successful, the transfer will be considered null and void from the beginning (ex tunc). The claimant remains the proprietor and may therefore claim the surrender of the property.

Despite the preservation of proprietorship status due to the void transfer, the claimant is in danger of losing the property to a third party. The German Civil Code offers the possibility to acquire property from the non-entitled party in good faith. In this case, the right to recover possession is terminated with the loss of property.

The former proprietor then retains a claim for damages or unjust enrichment against the fraudulent party. The latter claim offers the possibility to demand the surrender of the benefits (ie, assets) of the perpetrator by obtaining the property. The claim therefore covers not just the achieved profit – any increase in value will be added. Since the claim for unjust enrichment aims for compensation in the form of value – not the recovery of the original funds – it is irrelevant if the proceeds of fraud have been mixed with other funds.

The Civil Code of Procedure does not cover any particular rules of pre-action conduct in relation to fraud claims. It is generally not necessary to carry out a dispute resolution before the court process. The statement of claim must include information as to whether, prior to the complaint being brought, attempts were made at mediation or if any other proceedings serving an alternative resolution of the conflict were pursued.

Criminal law distinguishes between offences that require a request by the victim to be prosecuted and offences that are automatically prosecuted ex officio due to their importance for the public interest – which applies for fraud, bribery, and breach of trust. An exception only applies where the victim is related to or lives in the same household with the perpetrator, or in the case of minor damage. Nevertheless, charges can be brought once the prosecutor considers the case to be of public interest.

Criminal Law

The victim of a crime may file a criminal complaint in order to prevent a defendant from dissipating assets or secreting them, and profit from the actions taken by the authorities in the context of the investigation. Should the prosecution decide to drop the investigation, the aggrieved person is entitled to lodge a complaint against the terminating notification.

If the perpetrator of fraud has obtained benefits from the offence, the court may order their confiscation, including benefits from the proceeds. The confiscation rules were changed recently and their practical importance is enormous. Confiscation not only supports the recovery of unlawfully obtained advantages from criminal offences – it also aims to deprive the perpetrator of the incentive to commit an offence against property by making it unprofitable to do so.

Third-party confiscation is disregarded at times, but plays an important role in practice. Assets may (and will) be seized and arrested as early as the investigation authorities deem it necessary. The receipt of benefits in good faith does not protect from confiscation. Third-party involvement may be extended to a public court hearing. The court before which the defendant has been indicted shall order that a person who is not an accused shall become a party to the confiscation aspect of the proceedings as an ancillary party, if the court anticipates that a confiscation order will be made against such a third person. Principally, the third person will have the same rights as the defendant, with the notable restriction that the hearing may even be conducted in the absence of the third party if it had been properly notified.

Code of Civil Procedure

In urgent cases, the Code of Civil Procedure provides for the possibility of interim relief of seizure and arrest. The remedy of seizure supports the securement of compulsory enforcement against movable or immovable property for a monetary claim. It can be issued if the enforcement of the judgment could be frustrated or is likely to become significantly more difficult. Regarding the grounds for arrest, there is a distinction between the arrest in rem, which “freezes” the debtors’ assets, and the subsidiary arrest in personam.

The court may issue the seizure dependent on the provision of a security. If the grounds for seizure have not been demonstrated to the court’s satisfaction, the court may only issue a seizure against a security due to the disadvantages that the debtor risks suffering.

Moreover, interim injunctions serve the purpose of securing the claim, but they are not as important as the measures of seizure and arrest in the context of fraud patterns.

It can be crucial for a claimant to have knowledge of the defendants’ available assets as this may influence the outcome of a civil lawsuit or the enforcement of the judgment – the disclosure of the defendants’ assets may assist their preservation. Hence, the claimant has a legitimate interest in obtaining such information.

A defendant can only be forced to disclose his assets after the judgment has been made. In the context of the enforcement of a monetary claim, the debtor is obliged to provide information to the court-appointed enforcement office of his financial circumstances and the assets he owns. In this regard, the debtor is required to cite all assets belonging to him, including dispositions made to an affiliated person over the last two years. In the case of non-compliance, the defendant may be sanctioned with coercive detention. If, in this case, the creditor files a corresponding application, the court issues a warrant of arrest against the debtor.

The German Code of Criminal Procedure offers tools for the preservation of evidence if there are concerns that evidence could be destroyed or suppressed.

If the evidence remains in the custody of the perpetrator or a third person, objects considered to be important evidence for an investigation shall be taken into custody. If the objects are in the custody of a person unwilling to surrender, they shall be seized, which means that they are taken away from the person in custody against their will or secured by other measures such as sealing.

To discover such evidence, the authorities can aim for, and the courts can issue, searches against a person who is suspected to be an offender or participant of an offence, suspected of handling stolen data, aiding after the fact, obstructing prosecution or handling stolen goods.

It may become necessary to obtain information or documents that are in the possession of a third party. However, they enjoy more protection and rights than a suspect. 

Evidence may be obtained by the search of other persons’ premises. The search against third parties is only admissible for the purpose of apprehending the suspect, following up the traces of an offence or the seizure of certain objects. It is necessary that certain facts support the conclusion that the person, trace or object sought is located on the premises of the other person. The third person concerned by the search has a legitimate interest in witnessing the proceeding, and is therefore allowed to be present or to be represented during the search.

The documents may then be seized for evidentiary purposes. Special requirements apply for third parties, and certain restrictions and privileges need to be taken into account, eg, for defence counsel. However, the restrictions do not apply if the privileged party is alleged to have participated in the offence itself, or committed a certain offence connected to the original offence, or if the objects concerned were derived from an offence, have been used or are intended for use in committing an offence or emanate from an offence.

There is no information on this issue available for this jurisdiction.

Interaction between Criminal and Civil Proceedings

Both criminal and civil proceedings have their own provisions and jurisdiction and therefore remain separate. The interaction between them can play an important role in seeking redress against the perpetrator.

There are advantages in filing a criminal complaint in the context of a civil procedure. While the parties must gather and present the evidence supporting their claim in a civil matter, the ex officio principle applies in a criminal investigation, and authorities and courts need to gather the evidence which may prove helpful in a civil lawsuit. An aggrieved person may inspect the investigation file if it can establish a legitimate interest – as said above, seeking a civil claim should be sufficient.

Evidential Value of a Criminal Judgment

While the two pillars of the justice system are formally separate, a criminal judgment or even investigative evidence may be used as documentary evidence in civil proceedings. This evidential use applies under the restriction that the civil judge must subject the criminal judgment to his own critical evaluation and, if necessary, hear witnesses again.

Delaying Proceedings

A civil court may suspend the main hearing during a legal dispute if the matter is being subjected to criminal investigation, and if this has the potential to influence the court’s decision. The suspension of the main hearing can lead to an unspecified delay in the civil proceedings. It is a strategic question whether or not to file a criminal complaint in the context of a civil claim.

Courts occasionally need to deal with uncooperative parties. The court may take certain actions to facilitate and accelerate the proceedings and issue a judgment despite such situations.

The Civil Procedural Code offers the court the possibility of issuing a default judgment. If a party does not appear at the hearing, or does not argue the merits, or does not speak out in the written pre-trial, a default judgment may be issued. The effects are far-reaching, but the party in default is granted a second chance, and the recipient of a default judgment has the possibility to appeal. If successful, the status of the proceedings prior to the failure to comply will be reinstated.

The defendant in a criminal hearing is obliged to be present before the court – the hearing does not take place in the absence of the accused so the rights of the accused to defend himself and to be heard are protected. The court is entitled to issue an arrest warrant if the defendant fails to attend. Certain exceptions to his mandatory presence apply, and criminal cases may be heard or continued without the defendant present under certain circumstances. While this scenario hardly ever happens in practice, a defendant is entitled to be represented in the hearing by a lawyer if the hearing can also be held in the absence of the defendant. Furthermore, the defendant may apply to be released from the obligation to appear at the main hearing.

There is no information on this issue available for this jurisdiction.

Sometimes an aggrieved party faces the problematic situation that the identity of the fraudulent person is unknown. This lack of knowledge may adversely affect the success of criminal procedure or a civil lawsuit in different ways.

In respect of a criminal prosecution, the victim may file a criminal complaint against an unknown offender. The identity of the perpetrator may be revealed during the investigation based on the ex officio principle that applies in criminal proceedings, and the victim may be informed if and when access to the file is granted. Obviously, the investigation authorities have better and more effective means of identifying individuals.

The Code of Civil Procedure, on the contrary, demands that the statement of claim includes the identity of and personal information on the defendant. Unless the fraud victim can provide such information, filing a civil lawsuit is not possible. Therefore, it may well make sense for the victim to file a criminal complaint in order to have the chance to obtain the identity through the official investigation, based on which a civil lawsuit can be filed afterwards.

Occasionally, witnesses do not co-operate and may thus hinder legal action. Certain provisions in both criminal and civil procedure secure the effectiveness of the summoning of witnesses.

In a criminal investigation as well as in a criminal court hearing, the properly summoned witness is obliged to appear and testify. If he fails to appear, the costs attributable to the default shall be charged. Beyond that, the refusal to appear and testify will be sanctioned with an administrative fine. If the fine cannot be collected, he may even be sanctioned with an arrest order for disobedience.

In respect of civil procedure, the court may exceptionally issue that the question concerning the witness be answered in writing if it considers the written testimony to be sufficient to proceed in this manner.

An important feature of any fraud claim is the extent to which an individual corporate director’s or officer’s knowledge is attributed to the company they represent, and if the corporation itself can be charged for fraud in the case of such attribution.

While there are legislative efforts attempting to change the current regime, German criminal law does not recognise criminal corporate liability. A criminal punishment can only be imposed on individuals, including a person who is acting on behalf of a company or corporate entity. However, criminal offences within a company, and in fact even breaches of administrative law, can have enormous implications for corporate entities. Companies can be made financially liable via the Statute on Administrative Offences (Ordnungswidrigkeitengesetz, or OWiG) which provides for both sanctions and confiscation measures against a legal person. Criminal or administrative offences within a company regularly qualify as failures of supervision by the management level, which in itself not only constitutes an administrative offence and leads to an individualised (administrative) penalty, but also triggers a company sanction and extensive confiscations or disgorgement measures.

Meanwhile, civil action depends on the legal structure of the entity if the claimant wants to go after the individual director, and while many structures clearly distinguish between corporate and personal liability and provide for a layer of protection limiting liability to the corporate assets, claims may well be extended to the directors personally if they are based on fraud and a director’s or officer’s knowledge thereof. Conversely, however, this knowledge can be attributed to the company if the director or officer acted on its behalf, and liability can be established against the legal entity.

There is no information on this issue available for this jurisdiction.

In order to secure the interests of the company, it is desirable that shareholders are able to take action on behalf of their company against the fraudulent directors who exercise control over the company.

There are certain rules enabling shareholders to bring a claim on behalf of their company against fraudulent directors who exercise control over the company. The shareholders of both general and limited commercial partnerships – including the executing director – are subject to a duty of loyalty to the corporation. This duty of loyalty obliges the executive director to advance the interests of the corporation. As a negative component of this duty, the director must refrain from damaging the corporate interests. With regards to a stock corporation (Aktiengesellschaft, or AG) or a limited liability company (Gesellschaft mit beschränkter Haftung, or GmbH), the law establishes the duty for the directors and officers to conduct the company’s affairs with the due care of a prudent businessman. Fraudulent conduct breaches such duties as it damages the purpose of the respective corporation. Therefore, the damages resulting from such conduct may be asserted by the shareholders on the behalf of the company.

It may sometimes be expedient to involve a third party in the assertion of a fraud claim. In special cases, the third party may be subject to extraterritorial jurisdiction. The following presents an overview of the possibility of joining a proceeding and the effects of international circumstances on proceedings.

Civil Proceedings

In Germany, there is the possibility to exchange or extend the parties participating in a lawsuit. The latter becomes relevant in the case of a desired joinder to a fraud claim that has already been initiated. There are no special rules in respect of the joinder of overseas parties; therefore, the general requirements apply. A distinction can be made between cases of joinders regulated by law and cases where the extension of the parties is based on the parties’ desire.

The German Code of Civil Procedure regulates the joinder of parties at the beginning of a lawsuit, and it is possible for a plurality of persons to jointly sue or be sued if they form a community of interest regarding the disputed right, or wherever the cause is identical, or the claims are based on an essentially similar factual and legal cause. In these cases, the effect of the joinder is limited; therefore, joined parties shall deal with their opponent as individuals in such a form that the actions of one of the joined parties will neither benefit the other joined party nor place it at a disadvantage.

Sometimes, the joinder of parties becomes necessary. This is the case whenever the legal relationship at issue can only be established vis-à-vis all joined parties uniformly, or whenever the joinder of parties is a necessity for other (procedural) reasons. Consequently, a joined party in default may be represented by the other joined parties.

In cases where the lawsuit has already begun, a joinder of parties regulated by law is only intended for the attachment of claims and other assets. Nevertheless, there may be cases in which the parties of an ongoing lawsuit desire a joinder. This situation is not regulated by law but acknowledged under certain circumstances, which, according to different opinions in literature and jurisprudence, are determined by law or depend on the possibility of an extension of the lawsuit. It is, however, uncontroversial that – in the second instance – the joinder of another defendant requires his consent, otherwise it would mean a loss for the joining defendant.

Moreover, there is the possibility to include another party in support of a party in the form of a third-party intervention. The intervention aims to give a third party who has a legitimate interest in the outcome of the legal dispute the possibility to intervene in the proceedings in support of one party. In contrast to the joinder of parties, the third person does not become a party of the lawsuit.

International jurisdiction in the field of civil law is mostly determined by the provisions of the Brussels Regulation (EU) 1215/2012. Based on different criteria such as residence, place of fulfilment of the contract, etc, the jurisdiction for German courts is still being established. The factual and local jurisdiction within Germany, then, lies in accordance with the Code of Civil Procedure.

Criminal Proceedings

Anyone, regardless of nationality or whether they are an individual or legal entity, can initiate an investigation by filing a complaint, and support it by providing evidence. There are special rules for aggrieved parties.

The party damaged by an offence may have a legitimate interest in getting access to the investigation file, in participating in the criminal proceedings, and have an influence on their outcome. With regards to certain offences (which are conclusively listed in the German Criminal Procedural Code), the aggrieved party has the right to join the hearing as a private accessory. While it would usually be alien to the systematics of the legal system (and hence is often only applied reluctantly in practice), the Procedural Code provides for the option to claim civil damages via the criminal route in what is called the adhesion procedure. 

The German Criminal Code establishes that, in general, German law (only) applies to offences committed in German territory. Nevertheless, there are a few exceptions to this territorial principle. Regardless of which law is applicable at the place where the offence was committed, German criminal law applies to certain offences committed abroad with a specific domestic connection or to offences committed abroad against internationally protected legal interests. Furthermore, German criminal law may apply to offences committed abroad against a German national if the act is a criminal offence at the place of its commission or if that place is not subject to any criminal law jurisdiction.

Enforcement requires the creditor to hold an enforcement title against the debtor, as this constitutes the foundation for the enforcement. A final court judgment is the most relevant method of enforcement, but the Civil Procedural Code lists a number of others, as follows:

• attachment of goods;
• attachment of claims and other assets held by the debtor, such as earnings;
• statement of assets by the debtor;
• coercive measures to ensure that actions are taken or refrained from;
• forced sale; and
• receivership.

All enforcement methods have the same basic requirements in common. According to the Procedural Code, the claimant must file a request and determine the type and extent of the enforcement. The application must be addressed to the enforcement body competent to deal with the matter locally, factually, and functionally; the functional responsibility depends on the enforcement method. An enforcement measure may only begin after the enforcement order has been served to the debtor.

The right to silence, from which the right to invoke the privilege against self-incrimination derives, is a constitutional right. A person suspected of having committed an offence has the right to remain silent during a criminal investigation against himself, or indeed against other people should his statement bear the risk of triggering an element of suspicion and hence an investigation. The right to remain silent extends to any civil matter during which the person concerned is requested to give a statement as a witness. The right to silence encompasses the refusal to testify and to refrain from giving any information. The right to refuse testimony is an expression of the Roman nemo tenetur principle, which states that no one can be forced to incriminate himself. The right to remain silent has a constitutional status that is equivalent to a fundamental right and represents a basic principle in criminal proceedings.

The Criminal Procedural Code establishes the right to remain silent in many forms and hence mirrors the Constitution. While criminal procedural law guarantees a right to defend yourself actively, ie, by giving statements in your defence (the right to be heard), the Code also states that a suspect must be instructed of his right to silence by the investigation authorities, ie, that he may refrain from responding to any questions or making any statements on the charges brought upon him. The right to remain silent exists during the entire criminal procedure and must not lead to a disadvantageous interpretation by the prosecution or a court. Therefore, no inferences must be drawn when a defendant invokes his privilege.

While suspects – who are not in custody – can refuse to even appear to an interview, witnesses’ attendance is in general compulsory once they are summoned by a prosecutor during an investigation or by a court to a hearing. Every witness must testify, but there are exceptions to the general rule.

A witness has the right to refuse testimony under certain circumstances. The Procedural Code establishes this in cases where the witness has a right to refuse testimony due to a close personal or family connection with the suspect (fiancé, spouse, etc) or on professional grounds (lawyers, doctors, clergy, etc).

Because of the nemo tenetur principle, witnesses also have the right to refuse to respond to any questions which would subject them, or their relatives, to the risk of being prosecuted for a criminal or regulatory/administrative offence. The assertion of the right to refuse to answer must not lead to any inferences.

Communication between lawyer and client is protected by a strict privilege in criminal matters. It can only be overcome where the lawyer is suspected of having committed or engaged in a criminal offence himself. There are a few controversies in this area, eg, on whether the communication before the formal initiation of an investigation is covered by the privilege, and how and to what extent the privilege extends to corporate entities. As mentioned above, legal persons cannot be prosecuted in, but may be affected by, a criminal investigation.

While the right to privilege is clearly defined in criminal matters, the civil procedure has different standards. As one of the main differences to common law jurisdictions, German civil action does not imply the “discovery” or “disclosure” of documents. On the contrary, the principle of provision applies, stating that the parties must present the facts of the case and that the court does not conduct its own investigation into the facts.

Nevertheless, there are certain exceptions comparable to the concept of “discovery” or “disclosure”, though these legal institutions are usually one instrument of judicial process management and do not create a direct claim between the parties. The German Code of Civil Procedure, for example, establishes the obligation to submit certain documents that are in the possession of a party or third person when ordered by the court. Nevertheless, the obligation does not apply for third parties entitled to refuse to testify – which includes a lawyer. Hence, lawyers do not have to surrender the documents that are in their possession. Lawyer-client communication enjoys the concept of privilege to a large extent and is ultimately at the discretion of the party concerned.

There is no information on this issue available for this jurisdiction.

The concept of “banking secrecy” ensures a bank’s secrecy towards third parties when it comes to customer-related data.

There are no statutes on the concept of “banking secrecy” in Germany. However, banking secrecy provisions often form part of the general terms and conditions of a banking contract, and the protection provided is of a civil nature.

Banking secrecy has limitations and can therefore be circumvented. The provisions that allow a breach of banking secrecy primarily serve the purpose of criminal prosecution. If a bank employee, for instance, is questioned by a criminal court as a witness for the purpose of seeking evidence in a fraud case, the refusal of an answer is not allowed. Furthermore, some special areas force private banks to surrender certain information to the authorities, with anti-money laundering provisions as the most prominent example. Transaction data needs to be submitted to the relevant anti-money laundering departments once certain criteria are met, and the banks’ systems are triggered to do so without the approval or even the knowledge of the parties to the transaction.

Both the occurrence and the importance of so-called “crypt-assets” has increased. The following paragraphs aim to give an overview of the classification of crypto-assets, legal requirements, and the treatment of crypto-assets within criminal proceedings.

Due to their qualification as a digital representation of a value which is not recognised by any central bank or public authority, crypto-assets are categorised as financial instruments rather than a monetary currency. Due to their marketability, crypto-assets such as Bitcoin inherit a determinable value depending on the supply and demand in the market. Crypto-assets can, therefore, be classified as electronic assets that are used as a private medium of exchange or for the purpose of investment.

The mere use of crypto-assets as a substitute for cash or book money in the exchange business does not require a permit. A service provider or supplier is allowed to have his services paid for via the virtual “currency” without thereby providing banking transactions or financial services. The reverse also applies – any customer is free to pay with crypto-assets where possible.

Commercial services trading with cryptocurrencies, on the other hand, are considered to be banking transactions or financial services and therefore require a licence.

For many reasons, if only due to their acknowledged market value, crypto-assets may be the object of fraudulent conduct.

In this context, it is questionable whether crypto-assets can be confiscated during criminal proceedings. As said above, and in general, if the perpetrator of or participant to criminal behaviour has obtained anything through the offence, the investigation authorities or the court order the confiscation of what was obtained, including the benefits from the proceeds.

Due to their market value, crypto-assets are considered and qualified as “what was obtained” by the perpetrator or the participant. Accordingly, the confiscation of crypto-assets is possible. When it comes to determining the value of the confiscated crypto-assets, an increase in value that occurs after the confiscation is irrelevant. However, the confiscation itself may prove problematic, as each transaction requires a private key. Whoever is in possession of the key thus has control over the assets. In cases where this person refuses to provide the pertinent information, confiscation is not possible.