Statement | "Promoting Compensation for Victims: Conditions for Sentence Reduction Should Be Carefully Reconsidered" — JRF Statement on the Legislative Yuan's Upcoming Third Reading of the Draft Fraud Crime Hazard Prevention Act

Last month, the Executive Yuan proposed draft amendments to certain provisions of the Fraud Crime Hazard Prevention Act (hereinafter the "Fraud Prevention Act"). The Legislative Yuan's Internal Administration Committee completed its review of the draft on December 17, 2025, and the bill is scheduled for a floor vote tomorrow, December 30. However, several provisions still warrant further consideration from the perspective of legislative policy. The Judicial Reform Foundation (JRF) therefore issues the following recommendations:

1. Strict requirements for sentence mitigation may not necessarily help victims obtain compensation.
   
2. Individuals should be afforded adequate judicial remedies against measures such as the suspension of all transaction functions of their accounts.
   
3. Fraud cases that meet the statutory threshold for mandatory defense should remain subject to trial by a collegial panel.
   

1. Strict Requirements for Sentence Mitigation May Not Necessarily Help Victims Obtain Compensation

Articles 46 and 47 of the Fraud Prevention Act currently provide for sentence mitigation or exemption where, respectively, an offender voluntarily surrenders after committing the offense or confesses during the investigation and all subsequent trial proceedings and, where criminal proceeds exist, voluntarily turns over those proceeds.

The proposed amendments would replace the requirement of "voluntarily turning over criminal proceeds" in these two provisions with a requirement that, within six months from the date of surrender or confession, the defendant pay in full the amount agreed upon with the victim through mediation or settlement. The legislative reasons state, in substance, that if a fraud offender is genuinely remorseful, the offender should voluntarily seek mediation or settlement with the victim after surrendering or confessing and should pay the agreed amount as soon as possible, while criminal courts and prosecutors are under no obligation to affirmatively facilitate mediation or settlement outside procedures prescribed by law.

JRF is concerned, however, that a legislative design intended to "protect the property interests of fraud victims" may fail to achieve that objective.

In practice, criminal investigations and trials in Taiwan can take considerable time, and many fraud cases will not reach the trial stage within six months after a confession or voluntary surrender. Given current judicial capacity, prosecutors and courts may also be unable to arrange mediation within that period. The proposed six-month requirement is therefore overly rigid and may prevent defendants who genuinely intend to compensate victims from completing restitution within the prescribed period.

Moreover, because the legal effect of satisfying the mitigation provision has already been changed from mandatory mitigation to discretionary mitigation, courts retain sufficient sentencing discretion to evaluate the actual circumstances of restitution and settlement in an individual case. There is therefore little need to impose excessively rigid threshold requirements.

Because a significant number of cases reach restitution and settlement only after the case has entered the trial stage, lawmakers should consider setting the deadline at the close of oral argument in the fact-finding trial, rather than six months after surrender or confession. This would increase the practical opportunity for victims to obtain compensation.

JRF also reiterates that some defendants in fraud cases may themselves initially have been victims of fraud—for example, people who were deceived into providing their bank accounts and were later treated by the courts as accomplices to fraud. At the same time, members of organized fraud schemes may raise the same defense, and courts frequently must resolve difficult questions of knowledge and culpability on a case-by-case basis.

Allowing greater flexibility in sentence-mitigation provisions would therefore also enable courts to impose sentences that more accurately reflect proportionality, individual culpability, and the factual circumstances of each case.

2. Adequate Judicial Remedies Should Be Available Against Measures Such as the Suspension of All Account Transaction Functions

The proposed amendments would add Paragraph 4 to Article 9 of the Fraud Prevention Act, authorizing judicial police authorities, for the purpose of investigating fraud crimes, to proactively notify financial institutions and businesses or personnel providing virtual asset services to mark deposit accounts, electronic payment accounts, credit cards, or virtual asset accounts suspected of involvement in fraud as warning accounts and to suspend all transaction functions.

The legislative reasons explain that judicial police authorities do not learn of suspected fraud accounts only through reports from financial institutions or virtual asset service providers; they may also identify relevant accounts through reports from victims or other informants. The proposed provision is therefore intended to permit earlier warnings and more timely interruption of the flow of suspected fraud proceeds.

JRF agrees that this legislative objective is legitimate. Nevertheless, since the enactment of the Fraud Prevention Act, practical problems have emerged involving mistakenly designated warning accounts, unrelated accounts being frozen or otherwise restricted, prolonged delays in lifting controls, and even lingering adverse credit effects after the warning status has been removed.

These problems reveal that the existing legal framework does not provide sufficiently clear or effective remedies for people whose accounts are subjected to measures such as designation as a warning account or suspension of all transaction functions.

The Executive Yuan should therefore clearly explain several issues:

• Are these measures legally attributable to the judicial police authorities that issue the notification, or to the financial institutions that implement the account restrictions?
  
• How does Article 9 of the Fraud Prevention Act interact with Article 45-2 of The Banking Act of The Republic of China, which authorizes banks to temporarily suspend deposits, withdrawals, or outward remittances where an account is suspected of illegality or obviously irregular transactions?
  
• What is the legal nature of the relevant control measures, including the judicial police authority's "notification" to a financial institution?
  
• How should public-law control measures be coordinated with the private contractual relationship between an account holder and a financial institution?
  
• Most importantly, what judicial remedy is available to an affected account holder?

To make procedures for warning-account designation and suspension of all transaction functions more rigorous, JRF recommends that such measures require the authorization of a prosecutor.

Persons subjected to warning-account or account-freezing measures should also be given a meaningful opportunity to seek judicial relief. One possible approach would be to draw on judicial practice treating account-freezing measures under The Banking Act of The Republic of China by analogy to procedures governing the return of seized property under the Code of Criminal Procedure.[1] Another would be to draw on the remedial structure of Article 245-1 of the Code of Criminal Procedure, which allows an affected person to petition the competent court for revocation or modification of specified investigative restrictions. JRF believes both approaches deserve serious legislative consideration.

3. Fraud Cases Meeting the Statutory Threshold for Mandatory Defense Should Remain Subject to Trial by a Collegial Panel

The proposed amendment to Article 44 would classify all "fraud offenses" as cases that are exempt from the ordinary requirement of a collegial first-instance trial. As a result, even a defendant accused of initiating, manipulating, or directing a fraud syndicate could be tried at first instance by a single judge.

Fraud cases, however, vary significantly in factual complexity, seriousness, and statutory sentencing ranges. Categorically exempting all fraud offenses from collegial first-instance adjudication and assigning them to a single judge is an overly broad legislative approach.

Article 31, Paragraph 1, Subparagraph 1 of the Code of Criminal Procedure requires mandatory defense where the minimum statutory punishment is imprisonment for three years or more. To ensure greater procedural rigor in cases carrying more serious penalties, JRF recommends that fraud cases reaching this mandatory-defense threshold continue to be adjudicated by a collegial panel at first instance.

[1] See, for example, Taiwan Taipei District Court Criminal Ruling 112-Sheng-1211 (2023) and Taiwan Yunlin District Court Criminal Ruling 114-Sheng-558 (2025).

Press Contact

Lyu Jheng-yan｜Director, Legal Policy Department, Judicial Reform Foundation

Phone: 02-2523-1178 #37

Email: elvin@jrf.org.tw