Financial Crime World

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Japan’s Financial Sanctions Regime: A Comprehensive Overview

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Japan has implemented a robust financial sanctions regime aimed at maintaining international peace and stability. The country’s sanctions regime targets entities and individuals suspected of engaging in illicit activities, including terrorism financing, money laundering, and proliferation of weapons of mass destruction.

Primary Legislation

The Foreign Exchange and Foreign Trade Act (FEFTA) serves as the primary legislation governing financial sanctions in Japan. Under this act, authorities are empowered to:

  • Freeze assets
  • Restrict movements of certain individuals
  • Prohibit export, import, provision of services, and transfer of funds in specific cases

Autonomous Framework

Japan’s sanctions regime also includes an autonomous framework aimed at targeting North Korea and other countries deemed to be threatening international peace. The Ministry of Finance (MOF) and the Ministry of Economy, Trade and Industry (METI) are responsible for:

  • Implementing financial sanctions
  • Operating the authorization system

Licensing and Authorization System

Japan has implemented a licensing or authorization system that allows relevant authorities to grant exemptions from the financial sanctions regime in specific cases. A detailed follow-up inspection system is also in place to monitor suspicious transactions and ensure adherence to regulations.

Penalties for Breach

For those found guilty of breaching Japan’s financial sanctions regime, severe penalties await, including:

  • Up to ten years’ imprisonment with labor
  • A fine of up to JPY 10 million or five times the subject matter of the violation, whichever is greater

Enforcement Agencies

The following agencies are responsible for enforcing Japan’s financial sanctions regime:

Contributors

This article was contributed by Anderson Mori & Tomotsune, a leading law firm in Japan.