First, it wouldn't surprise me to find out that most of their crimes are committed by a fairly small number of people and they know who most of them are. That said, if you subsidize something, you get more of it. I don't expect this sort of policy to work very long. If they would throw the book at the criminals and prosecute them aggressively, that also might keep them out of circulation.
Second, there is very little hard information in the article. I have to wonder if they are cherry picking their statistics to make this look good and the media isn't digging very far.
IMO, there are no short cuts around human nature.