International Fraud & Asset Tracing 2024 Comparisons

Spanish Criminal Code

There are several criminal offences provided for in the Spanish Criminal Code (SCC) that may fall under the broad concept of “fraud”. These include the following.

Basic fraud (Article 248 of SCC)

In its most basic form, fraud consists of using deception to induce another person to engage in a transaction to their own or another’s detriment.

Some specific forms of fraud (Articles 249 and 251 of SCC)

Articles 249 and 251 regulate the following specific forms of fraud.

• Cyber fraud – involves hampering, tampering with or otherwise interfering with computer systems, or manipulating computer data in various ways, to unjustly transfer property or assets, causing harm to another.
• Credit card fraud – this type of fraud includes the unauthorised use of credit or debit cards, travellers’ cheques, or other payment instruments to conduct transactions that harm the cardholder or a third party.
• Fraudulent sale – involves a seller falsely claiming the authority to sell or lease an asset, despite not owning it or having previously sold it and thus not having the right to sell it again.
• Concealment of mortgage – occurs when a seller does not disclose to the buyer that the asset being sold is subject to a mortgage.
• Fake contracting – involves the creation of a fake contract to cause harm to another party.

Article 249 of SCC outlines several aggravating circumstances. These circumstances include situations where the fraud:

• is committed concerning items of basic need, housing, or other goods of recognised social utility;
• is perpetrated by forging another’s signature or by tampering with official documents;
• involves assets of artistic, historical, cultural or scientific significance;
• is particularly severe due to the extent of damage or the economic hardship inflicted on the victim or their family;
• involves sums exceeding EUR50,000 or affects a large number of people;
• is committed with an abuse of personal relationships between victim and fraudster, or the fraudster takes advantage of their business or professional credibility;
• is perpetrated by manipulating evidence in court proceedings (procedural fraud); or
• involves recidivism.

Securities fraud (Article 282 bis of SCC)

Securities fraud is defined as the deliberate falsification of economic and financial information that is presented in prospectuses for issuing financial instruments or in mandatory publications by listed companies as per securities market regulations with any of the three following objectives:

• attracting investors or depositors;
• placing any type of financial asset in the market; or
• securing any kind of financing.

Accounting fraud (Article 290 of SCC)

This crime involves the falsification of a company’s annual accounts or any other mandatory corporate documents that record its financial or legal status in a way that could cause harm to the company, its shareholders or third parties.

Embezzlement (Article 252 of SCC)

Embezzlement is committed by those who, having the authority to manage someone else’s property, granted by law, assigned by an authority or assumed through a legal agreement, violate this trust by exceeding their powers thereby causing harm to the managed property.

Misappropriation (Article 253 of SCC)

Misappropriation is committed by those who, having been entrusted with money or any other type of movable property by someone else, appropriate these assets for themselves.

Embezzlement of public funds (Articles 432–435 bis of SCC)

Embezzlement of public funds involves a variety of criminal offences related to the mismanagement of public funds. The most serious offence, provided for under Article 432 of SCC, is committed by any public official who misappropriated public funds for themselves.

Embezzlement of public funds encompasses a range of criminal offences that relate to the improper handling of government money. Among these, the most serious offence is outlined under Article 432 of the SCC, which applies to any public official who misappropriates public funds for personal use.

Bribery of government officials (Articles 419–427 of SCC and Article 286 ter of SCC)

With regards to domestic public officials, the definition of bribery is outlined under Articles 419 to 427 of the SCC. Bribery is defined in very broad terms and, therefore, virtually any gift or monetary offering extended to a public official may constitute a criminal offence, including facilitation payments.

Conversely, the approach to bribery involving foreign officials is more constrained. Article 286 ter of the SCC specifically targets payments or gifts that are intended to secure or maintain a public contract, business or any competitive advantage in international economic activities. Under this article, the scope of what constitutes bribery is much narrower, focusing on acts that directly influence international business dealings. Facilitation payments, which are small sums paid to expedite standard official actions, are generally not included under this definition, reflecting a different treatment in the context of international relations and commerce.

Private corruption (Article 286 bis SCC)

Private corruption is the act of a company’s executive, manager, employee or collaborator either directly or indirectly in accepting, requesting or receiving unjustified benefits to improperly favour another party in business transactions. Similarly, offering or promising such benefits to influence business decisions also carries penalties.

Government contracting fraud (Article 262 of SCC)

Government contracting fraud, as outlined in Article 262 of SCC, includes criminal behaviour such as soliciting or offering gifts to by-pass public bidding processes, and colluding to manipulate the prices in public tenders or auctions.

Tax evasion (Article 305 of SCC)

Tax evasion is considered a criminal offence only when it exceeds the amount of EUR120,000 per tax and fiscal year. Below that threshold, tax evasion is not considered a criminal offence, but an administrative infraction. The amount of this threshold is lowered to EUR50,000 when the fraud affects the interests of the European Union.

Social security fraud (Article 307 of SCC)

Social security fraud is defined as the act of defrauding the social security system by evading payments, obtaining undue refunds or improperly benefiting from deductions, with the total amount exceeding EUR50,000.

Subsidy fraud (Article 308 of SCC)

Subsidy fraud is defined as the act of obtaining public subsidies or aid, including those from the European Union, of over EUR100,000 by falsifying eligibility conditions or concealing disqualifying conditions, or by misapplying funds meant for specific purposes to other uses.

Conspiracy, proposition and provocation (Articles 17 and 18 of SCC)

Conspiracy, proposition and provocation are three distinct criminal figures defined under Articles 17 and 18 of SCC. They are only criminalised with regards to specific criminal offences, including all those listed above.

• Conspiracy occurs when two or more individuals agree to commit a crime and make a decision to carry it out.
• Proposition occurs when someone who has resolved to commit a crime invites another person to participate in its execution.
• Provocation refers to acts of incitement to commit a crime, conveyed through media such as radio, press or the internet.

An employee who has received a bribe from a third party could be liable for private corruption under Article 286 bis of SCC and could face both criminal and civil charges.

• Criminal action – Should the employer decide to pursue criminal charges against an employee who accepts a bribe, they have the right to act as a private prosecutor in criminal court. They can request the court to impose criminal penalties on the defendant, including imprisonment. Notably, an individual convicted of private corruption could face up to four years in prison. It should be clarified, however, that the Public Prosecutor’s Office can also bring criminal action against the employee regardless of whether the employer has pressed charges or not.
• Civil action – Additionally, the aggrieved party may seek compensatory damages from the recipient of the bribe. It is the prerogative of the wronged party (in this instance, the company whose employee accepted a bribe) to pursue damages either within the criminal proceedings or through a separate civil lawsuit.

Furthermore, labour law offers specific remedies for this kind of misconduct, notably including the termination of employment for breach of contract.

Individuals who knowingly aid others in executing a fraudulent act may be deemed accomplices and thus held liable for the criminal offence. Depending on the extent of their participation, accomplices can be given the same sentence as the principal offender or a lesser sentence (see Articles 28, 29 and 63 of SCC).

Furthermore, there are several criminal offences that specifically target recipients of crime proceeds. These include receipt of stolen goods (Article 298 of SCC) and, most importantly, money laundering (Article 301 of SCC).

Under Article 122 of the SCC, any person who receives the proceeds of crime for free (or for a value that does not match their market value) becomes personally liable and must compensate the victim of the crime, as beneficiaries of the proceeds of crime. The term used to describe such beneficiaries is “partícipe a título lucrativo”, which refers to individuals who benefit financially from the crime without necessarily being involved in its commission.

Additionally, the SCC allows courts to confiscate the proceeds of crime even when they have been transferred to a non-guilty third party, if this party acquired them knowing they stemmed from illegal activities or if a reasonable person would have had grounds for suspicion regarding their illicit origin (see Article 127 quater of SCC).

Victims of fraud have the right to initiate independent civil litigation against individuals who have received assets obtained through fraudulent means, even if they had no knowledge of their illegal origin nor were there any grounds for suspicion, but only for three years after they acquired the asset.

The statute of limitations varies depending on the seriousness of the criminal offence in question. The general limitation period is five years. However, in cases of aggravated fraud, the limitation period commonly rises to ten years.

Under Articles 110 and 111 of SCC, all assets acquired via a criminal offence must be returned to their rightful owner. This applies even if the asset is currently held by a third party who acquired it legally and in good faith. If restitution of the original asset is not possible (for example, if the asset has been destroyed or is no longer recoverable), the offender is required to compensate the victim for their loss.

If the fraudster has invested the proceeds of the crime and generated gains, the victim does not have a claim to these additional profits. However, the court may decide to seize these gains as they are still considered proceeds from the crime.

No specific pre-action conduct rules apply.

The Spanish Criminal Procedure Act (SCPA) grants criminal courts the authority to issue in rem freezing injunctions over defendants’ assets upon request by either the public or private prosecutor, when such action is deemed necessary to prevent the defendant from dissipating or concealing the proceeds of crime. The adoption of a freezing injunction requires that the following requirements are met.

• Fumus boni iuris – the court must appreciate probable cause that a criminal offence has been committed, the defendant is responsible for it and they are in possession of the proceeds of crime.
• Periculum in mora – the court must appreciate a clear danger that, if the injunction is not granted, the defendant could dispose of or otherwise conceal their assets in order to prevent the complainant from recovering the proceeds of the crime or receiving financial compensation.

Despite some inconsistent rulings from different courts and ambiguity in the law on this matter, it is widely accepted that, contrary to civil proceedings, freezing injunctions in the context of criminal proceedings do not obligate the complainant to provide a cross-undertaking in damages.

A complainant trying to circumvent a freezing injunction might be charged with contempt of court or concealment of assets.

Investigating courts are responsible for the investigation of most criminal offences including most cases of fraud. Supported by law enforcement, these courts are invested with extensive investigative powers, granting them almost unrestricted access to delve into the financial dealings of defendants. Within this investigative framework, an aggrieved party acting as a private prosecutor is entitled to petition the investigating court for an order compelling the defendant to disclose their assets. However, the ultimate discretion on the actions to be undertaken at any given point, aimed at safeguarding the investigation’s efficacy, rests with the investigating court.

The complainant is not required to give a cross-undertaking in damages.

The extensive investigative powers that investigating courts have include the adoption of any measures deemed necessary (and within the limits of the proportionality test) to preserve any evidence of a criminal offence. This includes the power to carry out searches of domiciles and to seize any documentary evidence.

Within this investigative framework, an aggrieved party acting as a private prosecutor is entitled to ask the investigating court to issue a search warrant or to seize any documents deemed relevant for the investigation. However, as stated in 2.1 Disclosure of Defendants’ Assets, the ultimate discretion on any actions to be undertaken at any given point, aimed at safeguarding the investigation’s efficacy, always rests with the investigating court.

Investigating courts and law enforcement can also order any third party to disclose any evidence deemed relevant to the investigation. If the disclosure order does not affect any constitutional right, law enforcement can issue disclosure orders on its own authority before the initiation of criminal proceedings by the investigating court.

Investigating courts, on the contrary, can only investigate within the framework of active criminal proceedings, which means they cannot issue any disclosure orders before the commencement of proceedings. However, investigating courts can (and often do) issue these kinds of orders before the defendant is given notice of the investigation.

Restrictions on the use of such material include (but are not limited to) the following.

• Legal privilege – any material protected by attorney–client privilege cannot be used as evidence in court. However, there are specific exceptions to the application of such privilege which are outlined in 6.2 Undermining the Privilege Over Communications Exempt From Discovery or Disclosure.
• Court warrant requirements– for materials protected by constitutional rights, such as privacy rights, a court warrant is generally needed for their disclosure. This requirement ensures that any invasion of privacy, including the disclosure of personal account information by financial institutions, receives judicial oversight and can be challenged in a higher court. Law enforcement agencies are thus prohibited from demanding such disclosures without a court-issued warrant.

Injunctions are generally expected to be issued, giving the defendant the opportunity to contest them. However, under exceptional circumstances they can be adopted inaudita parte – without hearing the defendant – if there is extreme urgency, and notifying the defendant could compromise the effectiveness of the injunction.

As outlined in 1.2 Causes of Action After Receipt of a Bribe, the wronged party may bring criminal action against the fraudster, acting as a private prosecutor in criminal proceedings, and also seek compensatory damages. It is the prerogative of the wronged party to pursue damages either within the criminal proceedings or through a separate civil lawsuit. Should they opt for the latter option – pursuing damages through an independent civil lawsuit – they are required to wait until the conclusion of the criminal case to initiate the civil lawsuit. But, in practice, it does make much more sense to leverage criminal proceedings to also seek (civil) compensation, because it would be faster (in the same judgment that declares criminal liability) and criminal courts rarely impose legal costs on the plaintiff, but civil courts do.

A judgment can be obtained without a full trial only in cases of plea bargain, where the defendant agrees to the sentence sought by the prosecution.

No specific rules apply to fraud claims. Claimants pleading fraud are subject to the same truthfulness standards as those required of any other criminal complainant.

Under Spanish law, it is possible to file complaints against unidentified fraudsters. Such complaints can be directed to an investigating court, the Public Prosecutor’s Office or law enforcement agencies. Typically, when the identity of the offender remains unknown, the standard procedure involves lodging the complaint with the police.       

An investigating court may summon witnesses to testify and compel any third party (be they a natural person or a legal entity) to produce evidence.

Under Article 31 bis of SCC, legal entities may be held criminally liable in two different scenarios.

Scenario A: Crimes Committed by Directors or Managers

In this scenario, offences are committed on behalf of the legal entity, and for their direct or indirect benefit, by their legal representatives or by those invested with authority to make decisions on behalf of the company or who possess organisational and control powers within it.

The legal entity may be exempt from criminal liability if the following four conditions are met.

• Preventative compliance system – the entity must have proactively established and implemented a compliance system before the commission of the crime.
• Independent supervisory body – the responsibility for overseeing the functioning and adherence to the compliance system must be allocated to a corporate body endowed with independent supervisory powers.
• Circumvention of compliance system – the perpetration of the crime by the individuals involved must have been executed in a fraudulent manner, effectively by-passing the compliance system.
• Diligence in supervisory functions – the entity must not have failed to perform or inadequately performed the supervisory duties as described above.

Scenario B: Crimes Committed by Employees

A legal entity may be criminally liable for the crimes committed by employees subject to the authority of managers and directors, if they were able to commit the crime due to the managers’ or directors’ significant failure to fulfil their oversight duties. In this scenario, the corporation can be exempted from liability if it has established and effectively implemented a compliance system prior to the crime’s commission.

Legal Requirements of Compliance Systems

In both scenarios, A and B, the corporate compliance system must meet the following requirements, set out in Article 31 bis 5 of SCC.

• Risk identification – the system must identify those activities that carry a significant risk of facilitating the commission of crimes.
• Clear chain of command – the system must clearly identify the people and bodies who are competent for making and executing decisions.
• Sufficient funding – the company must allocate adequate resources to ensure the compliance system operates effectively.
• Whistle-blowing channel – the system must incorporate mechanisms for reporting potential misconduct. These mechanisms should be in compliance with the standards set by the Whistleblowers Protection Act.
• Disciplinary system – there should be a framework within the company to penalise managers, directors or employees who do not adhere to the compliance system.
• Periodic updates – the efficacy and relevance of the compliance system should be regularly reviewed and updated, especially following the discovery of significant breaches or substantial changes within the organisational structure.

Liability for Certain Criminal Offences

Lastly, it should be noted that legal entities can only be held liable for certain criminal offences, including fraud and corruption-related offences. Significantly, the list of criminal offences which legal entities can be held liable for does not include the crimes of embezzlement or misappropriation of funds.

There are no specific rules governing the criminal liability of those who stand behind companies when the company has been used as the vehicle for fraud. The crucial criterion for assigning responsibility for a criminal offence and identifying the perpetrator is the determination of who had effective control over the fraudulent activity. Consequently, if the Ultimate Beneficial Owner (UBO) of a company exercised effective control over the fraud conducted through the company’s operations, they would be held accountable regardless of the corporate veil.

There are no specific rules governing the criminal liability of directors. As stated in 3.2 Claims Against Ultimate Beneficial Owners, the crucial factor in assigning criminal liability is determining who exercised effective control over the fraudulent activity. Therefore, the criminal liability of directors, as with any other individual, arises from their dominion over the criminal activity. There exists no concept of strict liability in this context; merely holding a position of authority within an organisation does not, in itself, justify assigning criminal liability. In sum, liability is contingent upon the individual’s role and control over the unlawful conduct, rather than their title or position alone.

The jurisdiction of Spanish courts over fraud cases is not contingent on the nationality of the defendants or their residency status. The determining factor is whether Spanish law recognises the jurisdiction of its courts over the specific instance of fraud.

The primary criterion for the exercise of jurisdiction by Spanish courts is the location where the fraud was committed (forum delicti commissi). This becomes particularly relevant in cases of online fraud, where pinpointing the exact location of the crime’s commission can be challenging. To address this, Spanish courts typically employ two legal doctrines.

• The Doctrine of Ubiquity – According to this principle, a crime is considered to have been committed in any jurisdiction where any element of the crime occurred. This allows for a broad interpretation of jurisdiction, particularly useful in cases where parts of a fraudulent scheme occur across different locations.
• The Doctrine of Effectiveness – This more recent development prioritises the jurisdiction that is best positioned to conduct an effective investigation, often the domicile of the defendant. This doctrine allows for practical considerations in cases of online fraud, where traditional notions of jurisdiction based on geographic boundaries may be less relevant.

Spanish law also allows for extraterritorial jurisdiction under specific circumstances outlined in Article 23 of the Spanish Judiciary Act. This provision is generally reserved for crimes impacting the state’s most important interests, such as treason, terrorism or drug trafficking. However, it also extends to certain frauds or fraud-related offences that could harm the state’s interests or involve Spanish public officials abroad. These include the following.

• Forgery of the royal signature or stamp, of the state seal, of the signatures of ministers and of public or official seals.
• Forgery of Spanish currency.
• Any other forgery that may directly harm the credit or interests of the state.
• Any crime committed by Spanish public officials residing abroad in the exercise of their functions.
• Any criminal offence against the Spanish public administration.
• Crimes related to currency exchange.
• Bribery of foreign public officials, private corruption and counterfeiting of medical products; but only if these crimes have been committed by Spanish nationals or foreign citizens with residence in Spain, or by any person acting on behalf of a Spanish company. However, Spanish courts are barred from prosecuting these crimes if international or national proceedings have already been initiated, except if those jurisdictions are unwilling or unable to conduct the investigation.

The exercise of extraterritorial jurisdiction in these cases is very unusual. However, recent pressures, notably from the OECD, have spurred Spanish courts to investigate more actively corruption cases involving foreign officials who have allegedly received bribes from Spanish nationals and companies. While multiple investigations are ongoing, to date there have been only three convictions for the criminal offence of bribery of foreign officials.

Service of proceedings to parties who reside abroad is conducted through mechanisms of judicial co-operation. In case of non-EU states, this is done through letters rogatory: an official communication issued by an investigating court and sent to authorities in the recipient country through the Spanish Ministry of Justice. If the requested state is a member of the Council of Europe, this should be done in accordance with the European Convention on Mutual Assistance in Criminal Matters of 1959. If the requested state is neither a member state of the Council of Europe nor of the EU, the letter rogatory will be governed by the applicable bilateral or multilateral treaty.

With regards to EU member states, service of parties is undertaken in accordance with EU law. Service to the defendant needs to be conducted through a European Investigation Order or through a European Arrest Warrant. In Spain, these are regulated by Law 23/2014, on the mutual recognition of criminal decisions in the European Union.

This phase of the legal process includes both the implementation of criminal sanctions – such as imprisonment and fines – and the execution of measures necessary to deliver compensation to the complainant. Typically, this involves tracing the defendants’ assets, seizing them and, if required, selling them at public auction.

The court that issued the judgment oversees the enforcement process. Parties involved in this stage include the plaintiff, the defendant and the Public Prosecutor, all of whom are permitted to participate in the proceedings.

When both fines and compensatory damages are ordered, the damages to the victim take precedence. This means that any available assets of the defendant are first allocated to satisfy the compensation owed to the victim. Only after the victim has been fully compensated will any remaining assets be used to pay the fines imposed by the judgment.

With regards to the enforcement of criminal sanctions, it is important to note that there are several instances in which prison sentences can be suspended for a specified period of time. This usually means that a defendant given a prison sentence of less than two years will have to serve no effective prison time, as long as they have no prior criminal record and and they have either paid the compensatory damages ordered in the judgment or have committed to a court-approved payment schedule.

The privilege against self-incrimination is recognised by the Spanish Constitution and the SCPA. This confers upon defendants the right not to co-operate with their own prosecution, which means they have a right to remain silent in court, the right not to produce any evidence that might incriminate themselves, and they cannot be prosecuted for perjury if they lie to protect themselves.

This right is extended not only to natural persons, but also to legal entities, as they can also be subject to criminal sanctions.

Courts are allowed to draw adverse inferences from the defendant’s silence, within the constraints set forth by the European Court of Human Rights in its landmark ruling, John Murray v United Kingdom, dated 8 February 1996. In essence, the silence of the defendant can be used as supplementary evidence of their guilt if there is compelling evidence that would demand an explanation from them, but their conviction cannot be based exclusively on their choice to exercise their right to remain silent.

Article 118.4 of the Spanish Criminal Procedure Act (SCPA) stipulates that all communications between defendants and their legal counsel are to be kept confidential. As such, if such communications are intercepted or seized – be it through a raid or as a result of wiretapping the defendant’s phone – the law requires the investigating court to order either the destruction of the recordings or the return of the correspondence, prohibiting their use as evidence in court. However, this exclusionary rule is not applicable if there exists probable cause to suspect that the lawyer is complicit in the criminal activities of the defendant.

There are no punitive damages in Spanish law. The only kind of damages that Spanish law recognises are compensatory damages.

Banking secrecy is not protected as such. However, clients of banking institutions do have a reasonable expectation of privacy over their financial records, and, accordingly, those records are protected by the general right to privacy. This means that law enforcement cannot request banks to disclose the financial records of their clients without a court warrant.

However, this protection only applies to natural persons and to information that could reveal information about their private lives. Therefore, law enforcement agencies are permitted to request banks to confirm, for instance, whether an individual holds an account or the balance of said account, but they are not allowed to access complete financial statements without a court warrant (see Supreme Court decision no 434/2021, 20 May 2021).

There is no specific regulation for crypto-assets. This means that there are no particularities in the way criminal courts handle crypto-assets in cases of fraud. They are considered to be fungible assets and personal property.