Previous legal situation was characterized by legal uncertainty even in the event of success
The increasing number of online scams has put the Code of Criminal Procedure and the victims' nerves to a severe test. Although procedural provisions allow fraud victims to be compensated within the framework of criminal proceedings, this is generally only the case if the perpetrator is convicted and damages are awarded. Previously, victims—even when assets were seized—had to await the outcome of the main proceedings or obtain an execution title against the perpetrators in order to be compensated for the damage suffered.
However, if the perpetrator remains unknown despite the implementation of useful investigative measures or their whereabouts cannot be ascertained, an indictment cannot be issued. In the absence of an indictment, there is also no main trial and thus no chance of an award of damages to a private party. Furthermore, the civil law enforcement of claims fails when the perpetrators are unknown.
Separate claims for surrender in preliminary proceedings were previously provided for in the Code of Criminal Procedure only for physical objects – such as cash. For cryptocurrencies and book money, there has been no statutory regulation for this so far. Even when the trail of the seized assets could be proven beyond doubt back to their original origin from the victim's crypto or bank account, a claim to surrender by the victim was repeatedly denied by the courts through the analog application of the law.
Thus, the victims faced an insoluble stalemate: although their assets were secured and confiscated by the Austrian law enforcement authorities, their release was refused. Again and again, the victims' confiscated assets were declared forfeit. As a result, the Republic of Austria is enriched by the amount of the victim's loss in such cases. For the victims, this is a result that is difficult to accept and, above all, unfair.
Clear definition of assets creates legal certainty for victims of online fraud
The increasing use of cryptocurrencies such as Bitcoin, Ethereum, or USDT has presented the criminal justice system with new challenges. However, even in the case of book money, the return of fraudulently obtained funds to the victim during preliminary proceedings was not provided for in the Code of Criminal Procedure and could only be resolved by means of a controversial legal analogy. The Criminal Procedure Law Amendment Act 2024 addresses this problem and creates clear statutory regulations for the procedural securing and enforcement of victims' claims:
- Seizure and confiscation of assets: Cryptocurrencies and other assets are explicitly regulated in the Code of Criminal Procedure for the first time. The legal definition of the word „asset“ eliminates uncertainties in the procedure for securing and confiscating incriminated assets.
- Seizure to government wallet instead of third-party ban: Seized cryptocurrencies are to be transferred to wallet addresses belonging to the criminal police authority and stored there. Previously, by analogy with bank claims, the prevailing view was largely that seizure would only be possible by issuing a third-party prohibition order to the exchanges involved.
- Release of assets: Victims of crimes – particularly fraud or extortion – who have lost cryptocurrencies or scriptural money to often unknown perpetrators receive improved access to seized assets through the reform of the Code of Criminal Procedure. Above all, the enforcement of claims for the surrender of seized assets during preliminary proceedings is facilitated by the explicit statutory anchoring.
Conclusion and Outlook
The reform modernizes Austrian law enforcement for the digital age. Despite the legal anchoring of the right to the release of incriminating assets during preliminary investigations, the practical applicability of the provisions will only become apparent in the coming months.
Undoubtedly, strengthening victims' rights represents a first step in the right direction. Unfortunately, however, some legally desirable clarifications were left unaddressed. In particular, a legislative clarification regarding the issue of domestic jurisdiction in crypto fraud (see already in this regard here) cannot be found in the 2024 Criminal Procedure Reform.
For further information and individual consultation, please feel free to contact us Roman Taudes and his team at any time at office@atb.law or by phone at 01 39 12345 available.
