It marked the first time police used the law, which took effect in February.
“The police in Copenhagen have seized around 79,600 kroner (10,700 euros, $11,900) from five foreigners who were trying to enter the country with fake identity papers,” the police said in a statement.
Two men and three women between the ages of 26 and 35 with Iranian nationality were arrested late Tuesday at Copenhagen’s airport and placed in detention for using fake documents.
The seizure law allows authorities to take any cash above 10,000 kroner (1,340 euros) and any valuable objects worth more than that.
The measure sparked sharp criticism from abroad after the Danish parliament passed it. The Washington Post compared it with the seizure of Jewish valuables by the Nazis.
The five arrested, who had in their possession more than 129,000 kroner, have asked for asylum which is under review, police added.
With the massive influx of refugees and migrants to Europe, many from war-torn Syria, Denmark received more than 21,000 asylum applications last year, a 44 percent jump from 2014.
The crisis has led the Nordic country known for its social benefits to tighten border controls which were recently extended until November.
Denmark has criticised the European Union for a lack of security at the bloc’s external borders.