Denmark cracks down on social dumping and money laundering

The TV documentary The Black Swan sent shockwaves through Denmark in early 2024 with revelations that criminal gangs and corporate lawyers are collaborating to defraud the state of millions, launder money and exploit foreign labour in violation of rules designed to prevent social dumping.

In the months following the documentary’s release, the Danish government and parliament have tightened legislation in several areas. Multiple lawsuits against the main figures in the case have been initiated or are already on their way to the courts. 

Corporate lawyer Amira Smajic played a main role in the scandal exposed by The Black Swan and was subsequently charged with fraud, forgery and theft. She was sentenced to three months in prison for fraud but pleaded not guilty and appealed the verdict. 

A new trial against Amira Smajic includes ten other alleged criminal offences, and it was scheduled to start on 12 September 2024. However, she reported being ill a few days before and the trial was delayed, according to several Danish media.

Angry minister of justice

Another lawyer was charged in September 2024 for money laundering involving millions of Danish kroner and for allowing large sums of money to flow through their own client account without making sure it did not stem from criminal activities. The charges were brought by the National Special Crime Unit (NSK) following more than 18 months of investigations.

According to the NSK, the lawyer used so-called pooled client accounts, where funds from multiple clients are collected in order to conceal and obscure the origins of the money. According to the NSK prosecutor, the lawyer had also carried out several money transfers to so-called invoice factories – companies that issue fake invoices.

Minister of Justice Peter Hummelgaard. Photo: Ministry of Justice

On 10 September 2024, the Danish government announced it would introduce a bill to strengthen control over whether lawyers are using pooled client accounts for money laundering. Banks will be given greater powers to check that lawyers’ pooled client accounts are not being used for money laundering, and Minister of Justice Peter Hummelgaard said this in a press release:

"I, like many others, was deeply outraged to see how members of society's elite and violent criminals appeared to help each other defraud our common funds in the documentary The Black Swan. It is deeply reprehensible, though unfortunately not surprising, to see how, among other things, lawyers' pooled client accounts were exploited." 

Stricter penalties

On 1 July 2024, Denmark also introduced a so-called “gang package” which involves stricter penalties and improved tools for police to fight gang-related financial crime like that unveiled in the TV documentary.

The gang package was passed by a broad majority in parliament. It means there is now a double penalty for certain forms of gang-related financial crime. Police have also been given better tools to investigate cases involving serious money laundering. 

A multidisciplinary team has also been established at the National Special Crimes Unit, which will specifically target gang-related organised financial crime, including the invoice factories.

Police have been given additional powers to perform covert searches in cases of severe money laundering, and it has become easier to confiscate criminal proceeds from gang members, often hidden with their partners or children.

There are now also expanded options for using undercover agents and phone tapping in cases involving various economic crimes, including serious money laundering.

“With the gang package we are taking a tough stance against the gangs’ shady businesses and organised financial crime,” said Minister of Justice Peter Hummelgaard when the gang package was adopted. 

90 fled and Indian nationals charged

Danish controls on social dumping have also been significantly tightened. In 2023, the Danish Working Environment Authority, the Tax Agency and the police began a tight collaboration to secure proper conditions in the labour market, and the results were presented in September 2024:

Inspections were carried out at nearly 8,000 Danish and foreign companies, resulting in 4,550 working environment notices. The Working Environment Authority has noted that 90 people have fled their workplaces.

The Tax Agency carried out more than 3,000 tax and duty inspections aimed at companies and people in sectors with the highest risk of rule violations. It resulted in tax collections worth half a million kroner (€67,000). That is an increase of 60 per cent on last year.

This joint authority drive against social dumping has also led to collaboration with Poland and the European Labour Authority (ELA) with the aim of coordinating inspections of Polish companies in Denmark. 

A Polish temporary employment agency that posted Indian workers to a construction site in Denmark was inspected in February 2024, and 33 Indian workers were charged with violating immigration laws because they did not have the required work permits for operating in Denmark.

Minister for Employment Ane Halsboe-Jørgensen (Social Democrats) said:

”Many of the challenges we face in Denmark with the illegal posting of third-country citizens are the same facing the rest of Europe. That’s why it is positive that we collaborate across borders which makes it easier to enforce the rules.” 

More tools

Recently, a broad political majority reached a new agreement that further tightens efforts against social dumping by providing more opportunities to crack down on illegal labour. It will now be possible to stop contractors who repeatedly and severely violate the rules – a key demand from trade unions.

It is also now possible to inspect housing rented to employees by employers. Additionally, the Danish Agency for International Recruitment and Integration (SIRI) can now demand that employees identify themselves during company inspections.

Minister for Employment Ane Halsboe-Jørgensen said in a press release that “the government will not accept that bad actors break the rules and exploit other people. That is why it is positive that authorities jointly continue the fight against social dumping. I want our authorities to have effective tools so that we no longer see the same problems recurring.”