The obvious incomparability with the principal under the Banking Law includes the situation that the agreement obviously exceeds the normal fixed deposit rate quoted by a typical bank (Taiwan)

Elva Chuang

According to the facts underlying the 108-Tai-Shang-3339 Decision of March 11, 2020 (hereinafter, the “Decision”) rendered by the Supreme Court, the Defendants obviously were aware that N Online Bank in the United Kingdom (hereinafter, “N”) was not a bank approved by the competent authority in Taiwan to operate the business of accepting deposits and was previously an investment plan used by A, a woman in mainland China, to recruit a multitude of people or unspecified people to become members of Website N and to collect funds denominated in British pounds and converted from Renminbi as remitted from financial accounts in mainland China before agreeing to and paying bonuses, interest or other remuneration, which was deemed a business of accepting deposits.  After A came to Taiwan to recruit Defendants B, C and D to jointly contribute to a fund and become the members of N, they jointly operated the illegal business of accepting deposits based on the N investment plan to recruit a multitude of people or unspecified people to become members of the N investment plan by agreeing to high interest and allowance payment.  The Defendants conducted investment roadshows to recruit unspecified downline members in the name of “bank deposit with interest payment.”  Not only did B and C act as lecturers for roadshows conducted from time to time and use their personal bank accounts to accept remittance of investment payment from the members, but B also accompanied the members to travel to mainland China to set up bank accounts directly so that they could deliver investment funds in Renminbi. D , who managed accounts, first received investment funds paid or remitted in New Taiwan Dollars before depositing such NTD funds in the personal accounts designated by the investors in order to pay the members interest and allowances obviously incomparable to the principals.  The Defendants received at least NT$31.54 million in deposit when operating the illegal business of accepting deposits.

According to this Decision, the “obvious incomparability with the principal” under Article 29, Paragraph 1 of the Banking Law should take into account the social and economic conditions at that time and place.  If an actor accepts funds from an unspecified person and agrees to or pays an interest rate obviously exceeding the time deposit rate quoted by a typical bank, such favorable interest rate offered by the actor will be sufficient to attract the unspecified person to deliver funds to such actor. This will then meets the criteria under such article.

In this case, B and others absorbed funds in the name of N by recruiting members to invest. In view of the social and economic conditions at that time and place, the allowances and profitability upon maturity which would be paid as agreed, in view of the interest (static allowances) and commissions (dynamic allowances) as part of the N investment plan, were obviously excessively and incomparable to the principals relative to the deposit rate quoted by a typical financial institution.  Moreover, at least 10% of the funds invested by the investors was allocated to different tiers of up-line investors and were not used for investment. Therefore, the offense should be imposed the penalty under the first part of Article 125, Paragraph 1 of the Banking Law.