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Requirements for Sentence Reduction Under the Fraud Crime Hazard Prevention Act—the Surrender of Criminal Proceeds Actually Acquired
On May 14, 2025, the Criminal Grand Chamber of the Supreme Court rendered ruling 113 Tai-Shang-Da Tzu No. 4096 (2024), unifying the interpretation of the first part of Article 47 of the Fraud Crime Hazard Prevention Act, which provides: “Those who commit fraud and confess during the investigation and all stages of trial, and voluntarily surrender their criminal proceeds, shall have their sentences reduced.” The Criminal Grand Chamber held that the term "criminal proceeds" refers to the personal proceeds actually obtained by the perpetrator through the criminal act. If the perpetrator did not actually obtain any personal proceeds, then confessing during the investigation and all stages of trial is sufficient to satisfy the requirements for sentence reduction under this provision.
Case Background
Defendant A, acting with the intent to jointly commit fraud with more than three individuals, participated as a frontline member of a fraud crime organization. Through dating apps, Defendant A engaged in conversations with women in mainland China and then misrepresented investment opportunities to solicit funds. Once a target agreed to invest, Defendant A would relay the information to secondary members, who would handle remittance procedures using bank accounts in mainland China to receive funds from the victims. Upon successful fraud, frontline members would receive about 10% to 20% of the fraudulent proceeds as a reward.
Defendant A conducted fraudulent activities that caused victims to remit amounts ranging from RMB 20,000 to 100,000. However, Defendant A received only TWD 7,000 in remuneration for a portion of the frauds, with no remuneration for the remaining acts.
Legal Issues in This Case
The first part of Article 47 of the Fraud Crime Hazard Prevention Act provides: “Those who commit fraud and confess during the investigation and all stages of trial, and voluntarily surrender their criminal proceeds, shall have their sentences reduced.”
1. In cases of joint fraud, does the term “criminal proceeds” mean the personal proceeds obtained by the defendant or the entire amount defrauded from the victims?
2. If the defendant did not receive any "criminal proceeds," would the defendant's confession during the investigation and all stages of trial suffice to satisfy the requirements of sentence reduction requirements under this provision?
Divergent Opinions of the Supreme Court
There has been legal debate over whether the defendant must surrender the entire amount defrauded from the victims to satisfy the requirements for sentence reduction under Article 47 of the Fraud Crime Hazard Prevention Act or whether it suffices to surrender only the criminal proceeds actually acquired. Furthermore, in the absence of any criminal proceeds, it is debatable whether the defendant may be eligible for sentence reduction solely by confessing during the investigation and all stages of trial. The Supreme Court has rendered divergent opinions on this issue.
Affirmative View
Supreme Court 113 Tai-Shang Tzu No. 20 Judgment (2024) held that the defendant's surrender of the criminal proceeds actually received was sufficient to satisfy the requirements for sentence reduction. The Supreme Court reversed the lower court's ruling of not reducing the sentence. With respect to defendants who did not obtain any criminal proceeds, the Supreme Court held that since the defendant had confessed during the investigation and all stages of trial, the requirements for sentence reduction under Article 47 of the Fraud Crime Hazard Prevention Act were satisfied.
Opposing View
Conversely, Supreme Court 113 Tai-Shang Tzu No. 3589 Judgment (2024) emphasized the legislative intent of protecting victims’ property rights and the principle of joint liability. The Supreme Court held that the defendant must surrender the full amount defrauded from the victims before sentence reduction under Article 47 of the Fraud Crime Hazard Prevention Act could apply.
In the same judgment, the Supreme Court held that that allowing defendants to be eligible for sentence reduction (or exemption) without surrendering any criminal proceeds, under the Fraud Crime Hazard Prevention Act, would result in them enjoying more favorable sentencing reduction than that provided under the Criminal Code. Therefore, the application of the sentence reduction provision under the Fraud Crime Hazard Prevention Act should be limited to cases in which the defendant has in fact obtained criminal proceeds.
Position of Criminal Chamber 3 of the Supreme Court
After deliberation, Criminal Chamber 3 of the Supreme Court concluded that the legislative intent of theFraud Crime Hazard Prevention Act is to combat fraud, not to “discount” the punishment. Thus, to satisfy the requirements for sentence reduction under Article 47 of the Act, the defendant must not only confess but also surrender all assets or benefits delivered by the victims. However, after consulting other criminal chambers, Criminal Chamber 3 found that most supported a narrow interpretation that limits "criminal proceeds" to the criminal proceeds personally acquired by the defendant, and does not include proceeds obtained by other accomplices. Accordingly, Criminal Chamber 3 submitted the issue to the Criminal Grand Chamber for a final ruling.
Academic Opinions
Professor Yang Yun-Hua
Citing the relevant provisions under German criminal law, Professor Yang notes that the primary factors considered in sentence reduction is whether the perpetrator has made efforts to remedy the harm and whether attempts have been made to reach a settlement with the victim; in particular, the perpetrator must provide full or substantial compensation to the victim (the compensation should exceed 50% of the loss). Professor Yang states that, from the perspective of German law, if the sentence reduction provision in the first part of Article 47 of the Fraud Crime Hazard Prevention Act is interpreted as requiring only the voluntary surrender of the criminal proceeds actually acquired, this would conflict with the spirit of "making efforts to compensate the victim’s damages" under German law, since the defendant would only need to confess and return a small amount of the criminal proceeds. This would make it almost impossible to constitute a statutory ground for sentence reduction. If defendants are allowed to receive sentence reduction simply by confessing and surrendering criminal proceeds equivalent to only a portion of the victim’s loss, this would contravene the legal system and legislative intent, resulting in more unfavorable consequences—defendants would easily enjoy the benefits of sentence reduction while victims would have no recourse for compensation. The low cost and high benefits of fraud would encourage continued engagement in fraudulent activities.
As for the situation where the defendant has no actual criminal proceeds, Professor Yang is of the view that merely a confession does not meet the law’s requirements for sentence reduction. Instead, it may be considered a mitigating factor under Item 10, Subparagraph 1, Paragraph 1, Article 57 of the Criminal Code.
Professor Huang Shih-Hsuan
Professor Huang argues that Article 47 of the Fraud Crime Hazard Prevention Act should be serve as a ground for the perpetrator's exemption from punishment. In practical application, it is important to avoid creating a mindset in the perpetrator that inability to pay the full amount would discourage the perpetrator from making a confession or any payment at all, which would hinder the achievement of victim compensation. Therefore, Professor Huang proposes a “differentiation approach,” whereby if the perpetrator plays a marginal or subordinate role within a criminal organization—such as a handler, driver, or money collector—the basis for compensation should be the criminal proceeds actually acquired, and further examination should be made as to whether the perpetrator has the actual financial capacity to compensate the victim. In this scenario, the criminal proceeds include both the perpetrator's actual criminal gains plus a portion of the perpetrator's own assets. Conversely, if the perpetrator is a core member of the criminal organization, he or she should be required to pay the victim’s entire loss to constitute “voluntary surrender of criminal proceeds.”
Furthermore, if the perpetrator has not obtained any actual criminal proceeds, concerning whether it suffices to confess during the investigation and all stages of trial to qualify for sentence reduction under the first part of Article 47 of the Fraud Crime Harm Prevention Act, Professor Huang believes that the perpetrator's confession still holds significance in assisting the investigation and prosecution. It also aligns with the criminal policy objective of facilitating victim compensation. Therefore, the sentence reduction provision in the first part of Article 47 remains applicable in such cases.
Supreme Court Criminal Grand Chamber 113 Tai-Shang-Da Tzu No. 4096 Ruling (2024)
The Grand Chamber holds that the provision in Article 47 of the Fraud Crime Hazard Prevention Act concerns the circumstances after the perpetrator's commission of the crime, and is unrelated to the illegality and culpability of the criminal act itself. Its nature constitutes a ground for sentence reduction. Since it is based on the principle of “individual” responsibility, the provision should apply only to perpetrators who meet the relevant requirements, and there is no room for its uniform application based on the principle of joint responsibility.
Furthermore, an analysis of the first and latter parts of Article 47 of the Fraud Crime Hazard Prevention Act reveals that the legislature has distinguished between the perpetrator's voluntary surrender of their criminal proceeds (first part) and the situation where the judicial police or prosecutor is able to seize all criminal proceeds (latter part). This provides for different levels of sentence reduction according to the degree of contribution. It is evident that the reference to “their” criminal proceeds in the first part of Article 47 is limited to the personal proceeds actually obtained by the perpetrator as a result of the crime and does not include criminal proceeds (i.e., property or benefits delivered by the victims) obtained by other accomplices or by the criminal organization to which the perpetrator belongs. Moreover, pursuant to Article 2 of the Fraud Crime Hazard Prevention Act, since the definition of “fraud crime” does not explicitly exclude attempted offenses (i.e., where no criminal proceeds have been obtained), the sentence reduction provision naturally applies to both completed and attempted offenses.
The Grand Chamber is of the opinion that, if the criminal proceeds referred to in the first part of Article 47 of the Fraud Crime Hazard Prevention Act are interpreted as all property delivered by the victim, the perpetrator might be deterred from making a confession due to inability to pay or being forced to surrender his or her lawful property. This would not serve to encourage perpetrators to reform themselves or to achieve the objectives of litigation economy, and victims would be unable to recover any portion of the defrauded property. Additionally, interpreting “property or benefits delivered by the victim” in this way would also cause practical difficulties in determining the amount of criminal proceeds and the applicability of sentence reduction provisions among accomplices.
Nevertheless, the Grand Chamber points out that a perpetrator who confesses and voluntarily surrenders the actual personal gains obtained through the commission of the crime may indeed be eligible for the sentence reduction provision under Article 47 of the Fraud Crime Hazard Prevention Act. However, the court should consider factors such as the perpetrator's role and degree of responsibility within the fraud organization, the proportion of the voluntarily surrendered property relative to the total amount defrauded from the victim, and the sincerity of efforts made to reach a settlement and compensate the victim for damages. Such considerations should guide the appropriate degree of sentence reduction. Only in this way can the principle of proportionality between crime and punishment be upheld.
Following the Grand Chamber’s Decision
After the Supreme Court Criminal Grand Chamber rendered ruling 113 Tai-Shang-Da Tzu No. 4096 (2024), the Ministry of Justice issued a press release stating that the legislative intent of Article 47 of the Fraud Crime Hazard Prevention Act is clearly to ensure that criminal proceedings involving fraud crimes are concluded as expeditiously as possible, and to enable victims of fraud to recover their property losses. Sentence reduction should apply only when the perpetrator confesses and voluntarily surrenders the criminal proceeds.
The Ministry of Justice further pointed out that, based on the Grand Chamber’s interpretation, the application of the sentence reduction provision would be entirely contingent upon the perpetrator's unilateral confession, without regard to whether the victim has been compensated. The Ministry of Justice holds that the Grand Chamber's ruling is contrary to the legislative intent. Therefore, the Ministry of Justice will continue to firmly advocate that the sentence reduction provision under Article 47 of the Fraud Crime Hazard Prevention Act be premised on “compensation for the victim’s losses” and will promptly initiate legislative amendments accordingly.