The so-called confiscable proceeds of crime under Article 136-1 of the Banking Law refer to unlawful gains such as exchange rate differences, management fees, handling fees or other remuneration actually received by the operator, excluding remittance payments received (Taiwan)

Alex Liao

The Supreme Court rendered the 108-Tai-Shang-2465 Decision of August 15, 2019 (hereinafter, the “Decision”), holding that the so-called confiscable proceeds of crime under Article 136-1 of the Banking Law refer to unlawful gains such as exchange rate differences, management fees, handling charges or other types of remuneration  actually received by the operator with the exception of remittance payments received by the operator.

According to the facts underlying this Decision, the Defendant was obviously aware that it was not a banking institution and was not allowed to handle domestic foreign exchange business except as otherwise permitted by law.  However, the Defendant logged into an auction website, posted on a webpage of the website information that it would provide New Taiwan Dollar to US Dollar conversion services via a third party payment platform and used social media to solicit customers to operate the foreign exchange business between the above-mentioned two places to the public.  Regardless of the amount of each foreign exchange transaction, a handling fee of NT$50 per transaction was charged, and the handling fee of NT$50 per transaction was wired into the Defendant’s bank account along with the foreign exchange amount before the Defendant converted the amount into US dollars based on the going exchange rate for payment to the customer’s third-party payment account via the Defendant’s third-party payment account. The Defendant received NT$212,720 in payment and NT$4,040 in handling fees, totaling NT$216,770. Later, victims who believed that they had been defrauded reported the Defendant to the police.  Notified by the police to provide an explanation before the police, the Defendant turned himself in and accepted the adjudication.  After the prosecutor’s investigation, an indictment was issued.

According to the Decision, the so-called foreign exchange business under the Banking Law refers to the business of accepting a customer’s request to conduct fund settlement with an institution or specific person in another place to handle the receipt and collection of payments between different places for the customer in order to settle the claim relationship between the customer and a third party or complete the fund transfer.    Usually, the patterns of crime involving illegal domestic foreign exchange business usually involve an actor who solicits customers by offering more favorable exchange rates than the rates quoted by banks and directly engages in the exchange rate settlement between different currencies by means of the bank accounts at the remitting and receiving ends to generate remuneration such as exchange rate differences, management fees and handling fees.  Under such circumstances, the foreign exchange operator only briefly disposes of the funds at hand in large or small amounts through settlement by concurrent receipt and payment.  The remitter has no intention to wire payments to the foreign exchange operator to engage in capital gain or financial operations to generate investment returns.  Therefore, the remittance payments received by a foreign exchange operator is not the “criminal proceeds” that shall be confiscated under article 136-1 of the Banking Law.

Moreover, the Supreme Court previously adopted a resolution regarding foreign exchange business handled by non-banking institutions, holding that criminal punishment shall be enhanced if the proceeds of crime exceed NT$100 million pursuant to the last part of Article 125, Paragraph 1 of the Banking Law.  As to the legal controversy over whether the amounts received by an operator to remit and pay the payees as instructed should be included in the proceeds of crime, the resolution affirmed that the amounts received  should be included.  The Supreme Court rendered a decision in the past pursuant to the gist of the above resolution.  However, this decision pertained to whether the “NT$100 million provision” in Article 125, Paragraph 1 of the Banking Law should include the amounts handled by illegal foreign exchange business operators, and this is not the “the same fact” as whether such amounts should be included in the “proceeds of crime” that should be confiscated under Article 136-1 of the same law.  Based on this opinion, the original decision hold that the amount should be confiscated in this case was merely the remuneration of NT$4,050 received by the Defendant, is not unlawful. The prosecutor’s appealing is not legitimate and should be therefore dismissed.