Under the old Taiwan Criminal Code, while an offender’s proceeds of crime were required to be forfeited, earnings of a corporate entity generally were not subject to forfeiture since a corporate entity was not regarded as an offender under the Criminal Code (even though it was possible for a corporate entity to receive proceeds of a crime). In 2015, prosecutors petitioned the court to confiscate proceeds of crime amounting to NT$1.85 billion received by Tatong Oil Ltd., an oil manufacturer whose chairman was prosecuted for violation of the Food Safety Act. The court, however, ruled that Tatong Oil Ltd. was not the offender and its property could not be forfeited. The court’s ruling was much criticized, and the public began to question that the Criminal Code seemingly encouraged offenders to shed their assets or to transfer their property to third parties, offering a way for offenders to maintain possession of the proceeds of their criminal conduct. Under such pressure, the government started to review the shortcomings of the old Criminal Code, which ultimately led to the amendment of the forfeiture-related provisions.
The amendment of the Criminal Code was promulgated on December 30, 2015 and will come into effect on July 1, 2016. Among the amended provisions, the one that has received the most attention is the expansion of the scope of the forfeiture of crime proceeds to include offence-related property held by third parties, including proceeds of crime, any property obtained in exchange therefor, or as the fruit thereof. However, to prevent the scope of forfeiture from becoming too broad, the amendment provides that only the following three types of proceeds of crime are subject to forfeiture: (1) those received by third parties who are aware of the crime; (1) those received by third parties with inadequate or no consideration; and (3) those received by third parties as a result of the offender committing the offence for such third parties. In addition, where legal or factual issues prevent the recovery of criminal proceeds from the offender, courts may now render an unilateral order of forfeiture against proceeds of crime in the possession of third parties, thus resolving the judicial system’s inability to recover the proceeds of crime once the offender flees.
The amendment carries significant implications for corporate entities. Under the old Criminal Code, only the offender’s proceeds of criminal conduct are subject to forfeiture. Tatong Oil Ltd., mentioned above, was not prosecuted for insider trading, and its profits generated from selling oil products manufactured in violation of the Food Safety Act would in principle not have been regarded as crime proceeds subject to forfeiture. However, after expanding the scope of forfeiture to include offence-related property held by third parties, the earnings of a corporate entity may now be subject to forfeiture.
The new Criminal Code provides that a forfeiture order shall be subject to the statutes in effect at the time of ruling. As such, the new Criminal Code shall apply to rulings or judgments rendered after July 1, 2016. Criminal cases currently pending before the courts may be affected by the amendment of the Criminal Code. In addition to the case described above, if the members of a company commit criminal offences under the Securities Exchange Act, the Patent Act, the Trademark Act or other criminal statutes, and the company consequently generate earnings, the company’s assets may be subject to forfeiture and thus suffer considerable damage.