International Fraud & Asset Tracing 2023 Comparisons

Last Updated May 02, 2023

Law and Practice

Authors



Del Rosal, Adame & Segrelles Abogados is a highly specialised white-collar crime and economic criminal law boutique, whose professionals are also well experienced in approaching any other criminal law area. With offices in Madrid, Alicante and Bilbao, its lawyers have been exercising their professional practice in almost every jurisdiction around the Spanish territory, including the National Court, the Supreme Court and the Constitutional Court. They have broad experience in procedural, regulatory-sanctioning issues, in compliance, and in conducting corporate internal investigations. The firm also provides a wide range of professional skills as well as excellent personal and material resources, has a regular presence in courts throughout Spain, and has good relationships with regulators from different fields. Moreover, it has an enviable track record of success at all levels of legal and sanctioning administrative proceedings, whether on behalf of criminal or civil perpetrators, direct or subsidiary, or in private prosecution.

Fraud claims in Spain are mainly, if not exclusively, of a criminal nature.

The Spanish Penal Code (SPC) includes the concept of fraud in a variety of criminal offences, and is a centrepiece of the Spanish legal regime for combating fraud in many sectors of social and economic life (contracts, labour, taxes, companies, etc).

Fraud

The more basic and general fraudulent behaviours include swindling, malfeasance and misappropriation.

Article 248 SPC (swindling) punishes with a prison sentence of six months to three years those who use sufficient deceit, for profit, to cause or lead another into error so as to have them carry out a deed of disposal to their own detriment or that of another. If the involved amount does not exceed EUR400, a fine of one to three months should be imposed.

Behaviour of the following is also considered swindling:

  • (i) those who, for profit, unduly hinder or interfere in the operation of an information system or improperly introduce, alter, transmit or delete computer data or, using any other computer manipulation or similar artifice, achieve a transfer not consented to regarding any patrimonial asset to the detriment of another;
  • (ii) those who, fraudulently using credit or debit cards, traveller’s checks or any other material or immaterial payment instrument other than cash or the data contained in any of them, carry out operations of any kind to the detriment of the owner or a third party;
  • (iii) those who manufacture, import, obtain, possess, transport, trade or otherwise provide devices, instruments, data or computer programs to third parties, or any other means designed or adapted specifically for the commission of the fraud provided for in said article; and
  • (iv) those who, for their fraudulent use, steal, appropriate or illegally acquire credit or debit cards, traveller’s checks or any other material or immaterial payment instrument other than cash.

The lower half of the penalty will be imposed on those who, for their fraudulent use and knowing that they were illegally obtained, possess, acquire, transfer, distribute or make available to third parties credit or debit cards, traveller’s checks or any other tangible or intangible payment instruments other than cash.

According to Article 250, the crime of fraud will be punished with a prison term of one to six years and a fine of six to 12 months:

  • (i) where it affects belongings of primary necessity, dwellings or other assets of recognised social utility;
  • (ii) where perpetrated by forging the signature of another, or by stealing, concealing or fully or partially destroying any process, file, archive or public or official document of any kind;
  • (iii) where it affects assets forming part of the artistic, historic, cultural or scientific heritage;
  • (iv) where it is especially serious, in view of the magnitude of the damage and the financial situation in which it leaves the victim or their family;
  • (v) where the amount of what is swindled exceeds EUR50,000, or affects a large number of people;
  • (vi) where, when perpetrated, it abuses the personal relations that exist between the victim and swindler, or where the latter takes advantage of their corporate or professional credibility;
  • (vii) where procedural fraud is committed, incurred by those who manipulate the evidence on which they intend to base allegations or use any other similar procedural fraud in judicial proceedings of any kind, causing the judge or court of law to mistakenly be led to hand down a resolution that damages the financial interests of the other party or a third party; and
  • (viii) where, when committing the criminal offence, the culprit is subject to an enforceable sentence for at least three crimes included in this Chapter of the SPC, although previous criminal offences that have been cancelled or should have been cancelled shall not be taken into account.

Should circumstances (iv), (v) or (vii) concur with circumstance (i) of the preceding section, a prison sentence of four to eight years and a fine of 12 to 24 months shall be imposed. The same penalty shall be imposed where the value of the fraud exceeds EUR250,000.

According to Article 251, the following will be punished with a prison sentence of one to four years:

  • whoever, falsely attributing power of disposal over a movable or immovable thing that they lack, either because they never had it, or because they had already exercised it, disposes of, encumbers or leases it to another, to the detriment of the latter or of a third party;
  • whoever disposes of a movable or immovable thing hiding the existence of any charge on it, or whoever, having disposed of it as free, encumbers or disposes of it again before the final transmission to the purchaser, to the detriment of the latter, or from a third party; and
  • whoever grants a simulated contract to the detriment of another.

Swindling entails the criminal liability of the legal entity.

Article 252 (malfeasance) punishes with the penalties provided in Article 248 or 250 those who have powers to administer the assets of another under the law, granted by authority or assumed via a legal transaction, and who infringe them by exceeding the limits of these powers and thus causing detriment to the assets administered.

Article 253 (misappropriation) punishes with the penalties provided in Article 248 or 250 those who, to the detriment of another, appropriate, for themselves or for a third party, moneys, belongings, valuables or any other movable property they have received in deposit, for administration or for safekeeping, or by any other title that produces the obligation to deliver or return them, or who deny having received them. Appropriating movable property belonging to another is also penalised (apart from in the cases outlined before), but with a lesser punishment.

According to Article 255, whoever commits fraud using electricity, gas, water, telecommunications or another element, energy or fluid from outside, by any of the following means, will be punished with a fine of three to 12 months:

  • using mechanisms installed to carry out the fraud;
  • maliciously altering the indications or metering devices; and
  • using any other clandestine means.

If the defrauded amount does not exceed EUR400, a fine of one to three months will be imposed.

There are other offences which encapsulate the idea of fraud in their structure.

Securities fraud

Article 282 bis of the SPC punishes those managers of a company (de facto or de iure) that issues securities listed on the stock markets who falsify the economic-financial information contained in the prospectuses used to issue any financial instruments or information that the company must publish, and make known pursuant to the stock market legislation information concerning its resources, activities and present and future business, in order to:

  • attract investors or depositors;
  • place any kind of financial asset; or
  • obtain financing by any means.

Where any of these actions causes damages to the investor, depositor, acquirer or creditor, the penalty is heavier.

Securities fraud entails the criminal liability of the legal entity.

Accounting fraud

Article 290 punishes directors of a company (ie, a company that can be incorporated or is under formation) who falsify the annual accounts or other documents that should record the legal or financial status of the company. This falsification must be done in such a way that can be deemed as appropriate to cause financial damage to the company, any of its shareholders or partners, or to a third party. Where financial damage is caused, the penalty is heavier.

Bribery of government officials

The SPC punishes authorities, public officers, jurors, arbitrators (both national or international, such as the Organic Act 1/2019 specified in Article 423), mediators, experts, administrators or receivers appointed by a court, bankruptcy administrators and any other party carrying out a public duty who, to their own advantage or that of a third party, were to receive or solicit, personally or through an intermediary, handouts, favours or remunerations of any kind, or who were to accept an offer or promise to:

  • carry out an act contrary to the duties entrusted to them, or not to carry out such, or to unfairly delay those they must carry out (Article 419); and
  • carry out an act inherent to their office (Article 420).

The same penalties shall also be imposed if the handout, favour or remuneration is received or solicited by an authority or public officer, in the respective cases, as a reward for the conduct previously described (Article 421). In addition, there is also a penalty where the subject accepts a handout or gift offered to them in view of their office or duty (Article 422).

The SPC also punishes private individuals who offer or deliver (even if the individual follows a solicitation) a handout or remuneration of any kind to any subject mentioned before (authorities, public officers, etc) in order for the latter to carry out a deed that is against the duties inherent to their office, or against an act inherent to their office, or in order for them not to carry it out, delay what they should carry out, or in consideration of their office or duty (Article 424).

It is worth mentioning that if the action achieved or intended by the authority or officer is related to procurement proceedings, subsidies or auctions called by public administrations or entities, the penalties shall be handed down to the natural persons and, where appropriate, the company, partnership or organisation concerned, barring their obtaining public subsidies and aid, entering into contracts with public sector institutions, entities or bodies and enjoying tax and Social Security benefits or incentives for a term of five to ten years.

The terms previously set forth apply where the subject is:

  • any individual who holds a legislative, administrative or judicial position or employment in a country of the European Union (EU) or any other foreign country;
  • any individual who carries out a public function for an EU country or any other foreign country, including a public body or public company, for the EU or another international public organisation; and
  • any public servant or agent of the EU or international public organisation (Article 427).

The Organic Act 1/2019 also modified Article 427, and expanded the concept of public servant or agent of the EU to include any individual with public functions consisting of the management of the EU’s financial interests.

Other Types of Fraud

Criminal anti-competition

Article 282 punishes manufacturers or traders who make false claims or declare untrue features in their offers or publicity of products or services, so as to cause serious, manifest harm to consumers, without prejudice to the relevant punishment for having committed other criminal offences.

Article 283 punishes those who, to the detriment of the consumer, bill higher amounts for products or services whose cost or price is measured by automatic appliances, by altering or manipulating these.

The SPC also provides penalties (Article 284) for altering prices:

  • using violence, intimidation or deceit;
  • disseminating news or rumours through the media using new information and communication technologies (the Organic Act 1/2019 includes, among other things, the internet), in certain circumstances; and
  • carrying out transactions to provide deceitful signs concerning the offer, demand or price of financial securities (following the Organic Act 1/2019, privileged information is not required), in certain circumstances.

It should be noted that Article 286 bis relates to criminal offences of corruption in business. The law punishes executives, directors, employees or collaborators of a trading company or any other firm (including sporting companies, executives, directors, employees or collaborators of a sporting company, whatever its legal status, as well as sportspersons, referees or judges) who, personally or through an intermediary, receive, request or accept (or offer or promise, as the Organic Act 1/2019 sets forth) an unfair benefit or advantage of any nature, for them or for a third party, as consideration for unduly favouring another in the acquisition or sale of goods or in the hiring of professional services, or in business relations (or, in the case of sports, who deliberately and fraudulently predetermine or alter the result of a match, game or competition of particular economic or sporting importance).

Finally, Article 286 ter punishes those who, by offering, promising or granting any undue pecuniary or other kind of benefit or advantage, corrupt or attempt to corrupt, personally or through an intermediary, an authority or civil servant, for their own benefit or that of a third party, or who attend to requests in that regard, in order for them to act or abstain from acting in relation to the exercising of public functions to obtain or conserve a contract, business or other competitive advantage in the course of international economic activities.

Article 288 provides that any criminal anti-competition action entails criminal liability of the legal entity.

Fraudulent labour conditions

The recent Organic Act 14/2022, of 14 December 2022, has created a new crime against the rights of workers, consisting of imposing illegal conditions on workers through hiring them under formulas unrelated to the employment contract, or maintaining them against a requirement or administrative sanction, with imprisonment from six months to six years and a fine from six to 12 months. This means that an employer is using apparently legal mechanisms to contract the workers but is using such mechanisms unlawfully – for instance, the employer uses a part-time contract when it is really hiring the services of a full-time worker and forcing them to work full time but paying them as a part-time worker.

Tax crimes

Articles 305 to 310 bis include criminal offences against the central exchequer and Social Security, penalising those who, by action or by omission, defraud the central exchequer, or that of the autonomous communities, special provinces or local authorities, by avoiding payment of taxes, of sums withheld or of those that should be withheld, or of deposits on account of remunerations in specie, or who unduly obtains reimbursements or take advantage of tax rebates, as long as the defrauded amount (per tax and year) exceeds EUR120,000 (Article 305). The Criminal Code governs tax crimes in detail in Articles 305 to 310 bis.

A tax crime entails criminal liability of the legal entity.

Government-contracting fraud

The SPC penalises influence peddling in Articles 428 and 429. The law provides a penalty for an authority or a civil servant who influences another public officer or authority, availing themselves of the powers of their office or any other situation arising from their personal or hierarchical relation with the latter, or with any other officer or authority, to attain a resolution that may directly or indirectly generate a financial benefit for themselves or a third party.

The law also punishes any private individual who influences a civil servant or authority, taking advantage of any situation arising from their personal relation with them or with another public officer or authority, to obtain a resolution that may directly or indirectly generate a financial benefit for them or for a third party. Influence peddling entails criminal responsibility of the legal entity.

Misappropriation of public funds is governed by Articles 432 to 435, which punish an authority or public officer who commits the criminal offence outlined in Articles 252 and 253 on public assets. After the Organic Act 1/2019 came into force, misappropriation of public funds entails criminal liability of the legal entity.

Fraud and illegal levies are governed by Articles 436 to 438, which penalise authorities or public officers who:

  • acting due to their office in public contracting, come to an arrangement with the parties concerned to defraud any public institution (private individuals who have schemed with an authority or public officer are penalised as well);
  • demand undue fees or tariffs, or those in an amount exceeding those legally set; and
  • abusing their office, commit any criminal offence of swindling or misappropriation of Social Security benefits.

Other illegal negotiations and activities by public officials, and breaches of trust in the performance of their duties, are set out in Articles 439 to 442 of the Criminal Code.

Campaign-finance/election law

The SPC punishes those who:

  • receive donations or contributions aimed at a political party, federation, coalition or group of electors in violation of Article 5.1 of the Organic Act 8/2007, of July 4th, on the financing of political parties (Article 304 bis); and
  • those who  participate in structures or organisations, of any type, whose purpose is to finance political parties, federations, coalitions or groups of electors, in breach of what is established by the law (Article 304 ter).

In the Spanish criminal process, the public prosecutor, the private prosecution and the popular prosecutor may exercise a criminal action, acquiring the status of accusing party. The Public Prosecutor’s Office is the public body to which the law entrusts the exercise of criminal actions in general and on behalf of the State.

The private prosecutor is the person offended or harmed by the crime (whether a natural or legal person), who may also become an accusing party, being entitled to bring a criminal action regardless of the actions of the public prosecutor. Moreover, in practice sometimes the public prosecutor decides not to prosecute and the person offended or harmed by the crime does, reaching the point of obtaining a conviction against the perpetrator of the crime against the criteria of the Public Ministry. Thus, in Spain criminal proceedings can begin and end without the need for the public prosecutor to accuse. In addition, any Spanish citizen (including legal persons, in accordance with the doctrine of the Constitutional Court), despite not being offended or harmed by the crime, may bring a criminal action, constituting a popular accusation after complying with legal requirements.

Thus, a claimant whose agent has received a bribe can either denounce the facts to the police, or to the public prosecutor, or can exercise a criminal action by themselves, being a party in the criminal proceedings.

According to the SPC, those criminally responsible for criminal offences are the offenders and their accessories (Article 27). Offenders are those who perpetrate the deed themselves, alone, jointly or by means of another used to aid and abet.

The following shall also be deemed offenders:

  • whoever directly induces another or others to commit a criminal offence; and
  • whoever co-operates in the commission of a criminal offence by a deed without which a criminal offence could not have been committed (Article 28).

Accessories are those who, not being included in the preceding Article, co-operate in the perpetration of the criminal offence with prior or simultaneous deeds (Article 29).

According to Article 298, whoever, for profit and being aware that a criminal offence against property or the social-economic order is being committed, in which they have not intervened either as an offender or an accomplice, aids those responsible to take advantage of the proceeds thereof, or receives, acquires or conceals those proceeds, shall be punished with a prison sentence of six months to two years.

A prison sentence of one to three years shall be imposed in the following cases:

  • in cases involving items of artistic, historical, cultural or scientific value;
  • in cases involving basic necessities, pipes, cables, equipment or components of electrical infrastructure or telecommunications services, or other items, intended for the operation of services of general interest, agricultural and livestock products, or the instruments or tools used to obtain them; and
  • where the events are particularly serious, in view of the value of the effects received or the damages that may have foreseeably been caused by the theft.

Punishment shall be imposed in its upper half on whoever receives, acquires or conceals the proceeds of the criminal offence to traffic therewith. Should the trade be carried out using a commercial or industrial establishment or premises, a fine of 12 to 24 months shall also be imposed. In these cases, the judges or courts of law, in view of the severity of the deed and the personal circumstances of the offender, may also sentence them to the punishment of special barring from exercise of their profession or industry, for a term of two to five years, and order the measure of temporary or definitive closing of the establishment or premises. Where the closing is temporary, its duration may not exceed five years.

Under no circumstances whatsoever may a sentence of imprisonment be handed down that exceeds that set for the criminal offence concealed. Should this be punished with a punishment of another nature, the sentence of imprisonment shall be substituted by that of a fine from 12 to 24 months, except where the criminal offence concealed is assigned a punishment equal to or lower than this. In such an event, the punishment for the criminal offence in its lower half shall be imposed.

According to Article 132 of the SPC, statutes of limitations are calculated from the day on which the punishable criminal offence was committed. In cases of so-called continued criminal offences, permanent criminal offences and criminal offences requiring assiduity, those terms shall be calculated, respectively, from the day on which the last infraction took place, from when the unlawful situation occurred, or from when the conduct ceased.

According to Article 131, criminal offences prescribe the following limitation periods:

  • after 20 years, when the maximum punishment set for the criminal offence is a prison sentence of 15 years or more;
  • after 15 years, when the maximum punishment set by law is barring for more than ten years, or a prison sentence of more than ten and less than 15 years;
  • after ten years, when the maximum punishment set by law is a prison sentence or barring for more than five years and does not exceed ten; and
  • after five years, all other criminal offences, except minor criminal offences, slander and defamation, which shall apply after one year.

Article 100 of the Spanish Criminal Procedure Law (SCPL) provides that all offences and misdemeanours, besides the criminal punishment of the guilty party, may give rise to civil action for the return of things, repair of damages, and compensation of material and moral damages caused by the punishable act. In addition, Article 116 of the SPC establishes that all persons held criminally liable for a criminal offence shall also be held liable under civil law if the facts give rise to damages or losses.

Some parties may be held accountable in a subsidiary civil way for damages or losses caused by the principal (for instance, employers, parents, etc), although liability shall first be enforced against the assets of the offenders, and then against those of the accomplices.

The criminal liability of a legal person shall involve their civil liability pursuant to the provisions contained in Article 110 of the SPC, jointly and severally with the natural persons who are found guilty under the same facts.

Under Spanish legislation, no particular rules of pre-action conduct apply in relation to fraud claims.

In Spain, victims of fraud can request in rem precautionary measures to prevent a defendant from dissipating assets or secreting them with a view to avoiding the consequences of a judgment.

Once there is evidence of a person’s criminal activity, the court will order them to post sufficient bail to ensure any monetary liability. The measure may include the seizure of sufficient assets if the bail is not posted.

The bail may be personal, pledged or secured by mortgage, or by providing a guarantee that may be constituted in cash, through an indefinite-term and payable-on-demand joint guarantee provided by a credit institution, or by any means that, in the opinion of the court, guarantees the immediate availability, if applicable, of the amount in question.

The Spanish Civil Procedure Code (SCivilPC), which is a subsidiary applicable legislation in criminal proceedings, provides that assets shall be seized in the following order:

  • money or current accounts of any kind;
  • credits and rights immediately realisable or realisable in the short-term, and securities, stocks or other financial instruments admitted to trading on an official secondary market;
  • jewelry and works of art;
  • money income;
  • interests;
  • movable or living property, shares, stocks or securities not admitted to official quotation, and social interests;
  • real estate;
  • salaries, wages, pensions and income from professional and autonomous business activities; and
  • credits, rights and values realisable in the medium- and long-term.

There are some unseizable assets, including, among others:

  • pets;
  • furniture and household goods;
  • books; and
  • instruments necessary for the exercise of the profession, art or trade to which the debtor is dedicated.

Additionally, the salary, wage, pension, remuneration or its equivalent that does not exceed the amount established for the interprofessional minimum wage is unseizable.

The court can order a person who has been indicted of a crime to post sufficient bail to ensure any monetary liability. The measure may include the seizure of sufficient assets if the bail is not posted. In that case, the accused person will be summoned to designate the assets which are sufficient to cover the monetary liability. Where the accused person does not designate the assets, the court will order to seizure of any assets which could be found through any information that may be gathered (property registration, etc).

According to Article 550 of the SCPL, the Examining Magistrates’ Court has the capacity to order entry and search, during day or night, where urgency makes this necessary, of any building or enclosed space, or part of it, which is the domicile of any Spanish national or foreign national resident in Spain. This always requires the prior consent of the interested party or, if there is no consent, a reasoned warrant immediately notified to the interested party.

Article 574 provides that, in order to demand the accounting books and papers of the accused, or other person, issuing a search warrant is necessary. However, it will only be issued where there is serious prima facie evidence that the measure will result in the discovery or verification of any fact or circumstance significant to the case.

The judge will order seizure of the instruments and effects of the crime, as well as books, papers and any other things which may be found, if this is necessary to the result of the pretrial proceedings. The books and papers seized should be numbered, sealed and initialled on all their pages by the court clerk, at their own liability. However, entry and search is usually performed by police authorities.

It is important to note that everyone is under the obligation to exhibit objects and papers which are suspected of relating to the case. Anyone holding these who refuses to show them will be penalised with a fine; and if they insist on their refusal, if the object or paper is important and if the nature of the case so advises, they will be prosecuted as a perpetrator of the crime of disobedience of authority.

In addition to as discussed in 2.2 Preserving Evidence, the SCivilPC expressly regulates the so-called preliminary proceedings, in which a private party can ask a civil judge to order another private party to exhibit, under oath:

  • documents on capacity, representation or legitimacy;
  • things in their possession with which the trial will be concerned, as long as of importance to the lawsuit;
  • company documents and accounts; and
  • bank accounts and financial, commercial and customs data of possible infringers of intellectual property or industrial property rights, etc.

Preliminary proceedings involve a person requesting the court to prepare a civil lawsuit; in a criminal complaint, search and seizure of documents can be directly requested of the examining magistrate.

Under Spanish legislation, it is not possible to seek procedural orders without notifying the intended defendant.

Victims of fraud almost always seek redress against perpetrators via the criminal process. Sometimes, but very infrequently, certain clients (eg, banks or big companies) may not wish to seek redress via the criminal process, as making public their having been a victim of fraud might damage their own reputation, since it shows they were not able to prevent the fraud or protect themselves and their clients/shareholders against such behaviour.

In any case, under Spanish legislation, the civil process can be activated at the same time as the criminal process (since the criminal judge also decides on civil consequences); thus, whether the criminal process delays the civil process is not relevant. If the offender is found not guilty of the crime in the criminal process, the civil process can then be activated.

In Spain, as a general rule, it is not possible to obtain a judgment without a full trial.

In some cases, a so-called sentence of conformity can be obtained, which implies a previous process of negotiation between the prosecution and the defence, in which the accused should recognise the facts attributed to them and, therefore, the waiver of the presumption of innocence, freeing the prosecution from the burden of proof of guilt. This puts an end to the process, based on utilitarian reasons or procedural economy, and the oral trial is avoided (Articles 655, 688, 784.3, 787 and 801 SCPL). This possibility may be activated only in those processes in which the requested sentence is not more than six years of imprisonment.

In Spain, there are no special rules or professional conduct for pleading fraud.

Nevertheless, falsely accusing another of a crime, even where that accusation is made simply in reckless disregard of the truth, is a criminal offence (Article 456 SPC).

In Spain, it is possible to bring claims against “unknown” fraudsters, and the police have the obligation to investigate them. However, where the police are not able to uncover who the fraudster is, the case will be closed.       

All those residing in Spanish territory, whether Spanish or foreign nationals, who are not prevented from doing so are under the obligation to attend the judicial call to testify as much as they know about what they are asked about if, for this reason, they are summoned with the formalities provided for in the law (Article 41 SCPL). They are obliged to tell the truth (ie, if they lie they may commit a crime).

Any person who resists testifying to whatever they know about the events they are questioned on will incur a fine of EUR200 to EUR5,000. If they persist in their resistance, they will be brought, in the first instance, before the examining magistrates by agents of the authority, and prosecuted for the crime of obstruction of justice provided for in Article 463.1 SPC, and, in the second instance, will also be prosecuted for the crime of serious disobedience of authority.

Since 2010, under the Spanish criminal legal system, a corporate entity can be held liable for fraud committed by some of the individuals who belong to or work for the relevant company. In order to establish corporate liability, it is necessary that the fraud was committed on the company’s behalf or for its (direct or indirect) benefit (the Organic Act 5/2010, which modifies the SPC). It is important to mention that corporate criminal liability requires proving that the company failed to exercise adequate control over the actions of its representatives, administrators, directives, employees and/or contracted workers. Thus, the criminal liability of a company requires not only the verification of the commission of the fraud by the aforementioned individuals, but also the verification of the absence of effective control measures to prevent the commission of criminal offences that those who are part of the organisation may incur (Supreme Court Decision 154/2016).

In addition, Spanish law establishes that a company can be exempted from liability if certain conditions are fulfilled. Those conditions are related to the implementation of management models that include measures of surveillance, monitoring and control appropriate to prevent, among other crimes, fraud (the Organic Act 1/2015, which modifies the SPC).

There is a range of penalties that can be imposed on companies, ranging from fines to the suspension of activities, and even the dissolution of the company.

Finally, Spanish law provides that transformations, mergers, absorptions or splits of companies do not extinguish criminal accountability, which will be transferred to the companies resulting from these commercial operations.

Criminal liability can be attributed to managers, officers and directors of companies where the court considers that they were aware of the criminal conduct and did nothing to prevent it despite being in a position to do so.

The Supreme Court has established that in cases of fictitious companies – that is, companies created with the sole purpose of committing a crime – the criminal liability regime for legal entities cannot be applied (Supreme Court Decision 154/2016). In those cases, according to the theory of “lifting the corporate veil”, the penalty will be imposed on the individuals who are the perpetrators of the fraud. Only companies with a minimum internal complexity can be held criminally liable (Supreme Court Decision 534/2020). Nevertheless, difficulties may arise in determining the threshold of internal complexity required by courts.

Under Spanish law, shareholders are allowed to initiate criminal claims against fraudulent directors who exercise control over the company. The claim can be filed with the competent authorities by shareholders who have knowledge of the commission of fraudulent offences.

The law establishes a series of offences for which executives can be denounced, including:

  • securities fraud (which punishes directors who, for example, falsify the economic-financial information contained in the prospectuses used to issue any financial instruments);
  • accounting fraud (which punishes directors who, for example, falsify the annual accounts or other documents that should record the legal or financial status of the company); or
  • embezzlement (which punishes directors who, breaching their duties, cause financial damage to the company).

Under Spanish law, any person or corporate entity can initiate legal proceedings related to crimes by referring them to the competent authorities. To join a procedure that has already been initiated, it is necessary to appear with a legal representative (procurador) and a lawyer. In general, Spanish courts have jurisdiction to handle and rule on cases related to crimes committed within Spanish territory, regardless of the stipulations of international treaties to which Spain has agreed.

Nevertheless, even where a crime is committed outside Spain, Spanish courts still have the authority to handle the case if the individuals responsible are either Spanish citizens or foreigners who have obtained Spanish citizenship after the crime was committed. This applies if certain requirements are met, as follows.

  • The act must be considered a crime in the country where it was committed, unless an international treaty to which Spain is a member does not require this condition to be met.
  • The individual or the state prosecutor who has been affected by the crime must bring a case before the courts in Spain.
  • The perpetrator of the crime must not:
    1. have been found not guilty;
    2. have been granted a pardon; or
    3. have been convicted and have served a sentence in another country.

Additionally, there are certain crimes that fall under the jurisdiction of Spanish law if committed by Spanish citizens or foreign nationals outside Spain. These crimes include:

  • any act of forgery that causes damage to the credit or interests of the State, including the distribution or use of such forgeries;
  • crimes committed by Spanish public officials while performing their duties abroad;
  • crimes against the Public Administration of Spain; and
  • crimes related to foreign exchange control.

There is another set of crimes that also falls within the jurisdiction of Spanish law under certain circumstances. These crimes include:

  • acts of corruption between individuals or within international economic transactions, where the accused is a Spanish citizen or a foreign citizen whose habitual residence is in Spain, or where the crime was committed by a director, administrator, employee or collaborator of a company or organisation based or registered in Spain, or where the case involves a legal entity or association based or registered in Spain;
  • crimes related to the counterfeiting of medical products and similar crimes that threaten public health, as regulated by the Council of Europe Convention of 28 October 2011, where the accused is a Spanish citizen or a foreign citizen whose habitual residence is in Spain, or where the case involves a legal entity or association based or registered in Spain, or where the victim is a Spanish citizen or an individual whose habitual residence was in Spain when the crime was committed.

This regulation has traditionally been used to prosecute terrorist offences, but is increasingly being applied to cases related to money laundering or corruption in business.

See 1.7 Prevention of Defendants Dissipating or Secreting Assets.

Another relevant aspect relates to the suspension of sentences – that is, when it has already been determined that the accused person is guilty. Thus, the Criminal Code establishes that, when certain requirements are met, the court may order that the person shall not go to prison. The requirements are:

  • the person not being a repeat offender;
  • the prison sentence being less than two years; and
  • (most relevant for this issue) the civil liability having been paid, or that there is at least a commitment to pay it.

Where the convicted person does not or cannot pay the civil liability, the court may revoke the suspension.

According to the Spanish Constitution, anyone who is arrested must be immediately informed, in a way they can understand, of their rights and the reasons for their arrest, and they cannot be forced to make a statement. The arrested person must be guaranteed the assistance of a lawyer during police and judicial proceedings, under the terms established by the law.

The SCPL, which is the law that regulates the rights of arrested or investigated persons, establishes that where a person is accused of a crime, they are entitled to exercise the right of defence from the moment they are notified of the existence of the proceedings. At that point, the accused person should be informed of the following rights, among others:

  • the right to be informed of the accusations against them, any relevant change in the investigation and the reasons on which the accusation was based;
  • the right to examine the proceedings;
  • the right to choose a lawyer;
  • the right to translation and interpretation;
  • the right to remain silent and not to make a statement if they do not wish to do so, and not to answer some or any of the questions put to them; and
  • the right not to make a statement against themselves and not to confess guilt.

The latter two rights are related to the privilege against self-incrimination.

As a general rule, under Spanish law, assertion of the right against self-incrimination cannot be deemed as inference of guilt. Nevertheless, Spanish courts have established that, given certain circumstances, the right to remain silent can be considered as an inference of guilt – for instance, in cases where there is a significant amount of evidence against the accused person that requires an explanation (Supreme Court Decision 474/2016).

In accordance with the SCPL, the Examining Magistrates’ Court has the authority to order entry and search of any building, including the domicile of any Spanish or foreign national residing in Spain. The search can only be performed with the prior consent of the interested party, or with a warrant of the court if consent is not given. If the accused party is a company, the domicile includes their management centre, registered office, branch establishment or other place where confidential documents are kept.

Spanish law also establishes that search warrants are necessary for demanding accounting books and papers of the accused parties or other persons. Courts will only issue such warrants if there is enough evidence that the measure will lead to the discovery or confirmation of any fact or circumstance relevant to the case. All books and papers are seized by the authorities, and everyone is obligated to exhibit objects and papers suspected of relating to the case. Refusal to show these may result in a fine or prosecution for the crime of disobedience of authority.

Regarding communications between lawyers and clients, it is important to note that according to the Organic Law 6/1985 on the Judiciary, lawyers are prohibited from disclosing any information or details that they may come across during their legal practice. Furthermore, they cannot be compelled to testify on such matters. This legal professional privilege extends to the documents they have prepared for their defence and the communications they have had with their clients.

Additionally, the SCPL guarantees the confidentiality of all communications between an individual who is under investigation or who has been accused of a crime and their lawyer. If such conversations or communications are recorded or intercepted during any investigation procedure, the judge will order their deletion and record these circumstances in the proceedings. This provision does not apply where there is objective evidence indicating that the lawyer participated in the criminal act under investigation or was involved with the accused in committing another criminal offence.

Some questions remain regarding the special privilege of corporate communications with in-house attorneys and any documents from them. In principle, the special privilege of secrecy also applies to the relationship between in-house attorneys and the company. Nonetheless, the European Court of Justice has stated that attorney-client privilege requires two conditions to be met:

  • the communications between the attorney and the client must be related to the client’s rights of defence; and
  • the communications must come from independent attorneys.

Spanish case law, on the other hand, has established that the communications between the company and an in-house attorney, as well as the documents they prepare, are protected by attorney-client privilege if they were made within the scope of their defence, advice or judicial counselling functions.

The SCPL states that any criminal offence can result in both:

  • criminal punishment for the guilty party; and
  • a civil lawsuit seeking compensation for damages caused by the crime, including the return of things and the repair of damages.

Additionally, the SPC provides that anyone who is held criminally responsible for a crime is also held responsible under civil law if the crime caused damages or losses. Where multiple people are responsible for a crime, the court will determine each person’s level of responsibility. Offenders and accomplices are jointly and severally liable for their respective levels of responsibility and may also be held responsible for the levels of responsibility of others involved. If an offender cannot pay damages, then the accomplices will be held responsible, in order of priority.

The criminal liability of a company includes civil liability, which in turn includes restitution, repairing the damages, and compensation for material and moral damages.

Insurers that have underwritten the risk of monetary liabilities arising from the use or exploitation of any asset, company, industry or activity may also have direct civil liability up to the limit of the legally established or contractually agreed compensation.

Several categories of persons may also be held civilly liable if they are not held criminally liable. These include:

  • parents or guardians for damages and losses caused by criminal offences committed by those over 18 years of age subject to parental rights or guardianship, and who cohabit with such offenders;
  • natural or legal persons owning publishing houses, newspapers, magazines, radio stations or television channels for offences committed using the media they own;
  • natural or legal persons who own establishments where offences were committed due to breaches of police by-laws or provisions; and
  • natural or legal persons dedicated to any kind of industry or commerce for offences committed by their employees or assistants in carrying out their obligations or services.

Economic information is a part of the constitutionally protected content of the right to privacy. Thus, banking data is confidential and not accessible to third parties or the general public, and is therefore subject to legal protection against possible illegitimate interference or intrusion.

The Spanish Constitution also provides that the protection of individuals regarding the processing of personal data is a fundamental right. The Organic Law 3/2018, on the Protection of Personal Data and Guarantee of Digital Rights, develops the right to data protection, which includes banking data, and provides for administrative sanctions for certain infractions.

The SPC covers the offence of disclosure of secrets, which includes banking information. In the most serious cases, prison sentences of up to five years can be imposed.

These rules can nevertheless be circumvented for the purposes of seeking evidence in fraud claims. In Spanish legislation, there is a general duty to collaborate with justice imposed by the Constitution and the Organic Law 6/1985, on the Judiciary. This duty is mandatory for all persons and companies, including banks. Thus, where a court requests information from a bank, the latter must provide it at any time during the judicial proceedings.

However, this raises two issues. The first is whether a judicial resolution is necessary to access someone’s banking data. Supreme Court Decision 110/1984 (and others – for example, 1604/2005) established that there is no obligation for a judicial resolution, since the Public Administration of Spain can also demand economic data, under certain circumstances, directly of individuals or through banks, who have the obligation to collaborate. 

The second issue concerns the possibility of using banking information in a criminal proceeding when it has been obtained illegally by third parties. The Supreme Court has ruled that such evidence is admissible, depending on who obtained the evidence (in this case, banking information). Evidence will not be admissible if it is obtained illegally by the police or the state apparatus. However, where the illegal evidence is obtained by a private individual disconnected from the state apparatus and who does not seek to fabricate evidence but to obtain profit (as in the case in question), the evidence will be considered admissible (Supreme Court Decision 116/2017).

Although crypto-assets are relatively recent, their relevance in economic and financial transactions has led Spanish legislators to introduce legal modifications to various regulations, including the SPC.

However, before these legislative modifications, the Supreme Court ruled on some aspects concerning crypto-assets. In Supreme Court Decision 326/2019, it was established that a cryptocurrency, specifically Bitcoin, does not have the legal status of money, since it does not fit the definition of electronic money established by Law 21/2011 on Electronic Money. According to the Supreme Court, it is an intangible asset.

The subject matter of the decision was a cryptocurrency fraud, in which a businessman received bitcoins from third parties with the aim of managing and operating with them, but actually only appropriated the investments. The most relevant aspect of the decision was the issue of civil liability, as the Supreme Court established that the convicted party did not have to return the stolen cryptocurrency, but rather its euro-equivalent value at the time when the investment had to be returned, plus an increase (the profitability that the Bitcoin unit price would have offered between the investment date and the expiry date of their respective contracts).

Regarding the modification to the SPC, the Organic Law 14/2022 on the Transposition of European Directives introduced virtual currencies and other crypto-assets as a means capable of committing fraud. It is necessary for these instruments to be capable of being used routinely for making payments. For instance, the SPC now punishes:

  • those individuals who, using any fraudulent material or immaterial payment instrument other than cash, carry out any type of transaction to the detriment of the owner or a third party (Article 249.1.b); or
  • those individuals who in any way falsify any payment instrument other than cash (Article 399 bis).

The SPC defines payment instruments other than cash as “any protected device, object or record, material or immaterial, or a combination of these, except legal currency, which, alone or in combination with a procedure or set of procedures, allows the owner or user to transfer money or monetary value even through digital exchange means.”

Del Rosal, Adame & Segrelles Abogados

Plaza de las Salesas, 3 – 1º Izquierda
28004 Madrid
Spain

+ 34 917 485 430

+ 34 911 223 587

administracion@dras-abogados.com www.dras-abogados.com
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Law and Practice in Spain

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Del Rosal, Adame & Segrelles Abogados is a highly specialised white-collar crime and economic criminal law boutique, whose professionals are also well experienced in approaching any other criminal law area. With offices in Madrid, Alicante and Bilbao, its lawyers have been exercising their professional practice in almost every jurisdiction around the Spanish territory, including the National Court, the Supreme Court and the Constitutional Court. They have broad experience in procedural, regulatory-sanctioning issues, in compliance, and in conducting corporate internal investigations. The firm also provides a wide range of professional skills as well as excellent personal and material resources, has a regular presence in courts throughout Spain, and has good relationships with regulators from different fields. Moreover, it has an enviable track record of success at all levels of legal and sanctioning administrative proceedings, whether on behalf of criminal or civil perpetrators, direct or subsidiary, or in private prosecution.