Minister for Immigration and Integration Kaare Dybvad Bek confirmed the agency had acted in breach of rules since 2012 in a parliamentary letter, reported by newspaper Politiken.
It is unclear why the practice was changed in 2012.
Danish rules state that, for an application for permanent residence to be frozen, the applicant must have been convicted of a crime and sentenced, not suspected.
Bek has instructed the agency to change practice to align with the law. But he wants the illegal procedure followed by the agency to become legal and is to table a parliamentary bill to this effect, according to the report.
The minister told Politiken it “sends the completely wrong signal if foreigners who are suspected or charged with a crime can be granted permanent residency if the application is processed before any verdict is reached”.
A court verdict “could have the consequence that permanent residency could not be given for an extended period and in the worst case indefinitely,” he said.
Three specific cases affected by the practice have now been concluded with the individuals receiving permanent residency, while 16 others are to be reopened, the newspaper writes.
The issue was uncovered after practice was questioned by the national conservative Danish People’s Party, which wants to freeze the applications of any persons under police suspicion.
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