Financial Crime World

Japan’s Economic Sanctions Regime: A Comprehensive Overview

Trade Restrictions and Licenses

The Foreign Exchange and Foreign Trade Act (FEFTA) applies not only to actions in Japan but also to transactions in foreign countries made by:

  • Representatives, agents, employees, or other workers of corporations with principal offices in Japan
  • Natural persons with a domicile in Japan

Similarly, the Act on International Terrorist Assets-Freezing restricts almost all transactions in Japan with designated terrorists, regardless of nationality or residency. This law also applies to transactions in foreign countries made by individuals or entities with connections to Japan.

Reporting and Compliance

Banks and crypto asset exchanges are required to:

  • Confirm that payments and underlying transactions do not violate sanctions or prohibitions under the FEFTA before proceeding with a transaction
  • Prohibit financial transactions and service transactions by relevant persons for a period not exceeding one year in cases of non-compliance

The Ministry of Finance may prohibit financial transactions and service transactions by relevant persons for a period not exceeding one year in cases of non-compliance.

Criminal Penalties

Individuals who violate economic sanctions laws and regulations can face:

  • Imprisonment for up to five years
  • Fines of up to 10 million yen (approximately $90,000 USD)

Corporations that violate these laws can also be subject to:

  • Fines of up to 500 million yen (approximately $4.5 million USD)

Government Authorities

The government authorities responsible for enforcing economic sanctions laws include:

  • The police: investigates and prosecutes criminal cases related to economic sanctions violations
  • Public prosecutors: prosecute criminal cases related to economic sanctions violations
  • Ministry of Finance: responsible for administrative sanctions, including prohibiting financial transactions and service transactions by relevant persons

Civil Penalties

Japan does not have a civil penalty system in place for violating economic sanctions laws and regulations.

Appeal Process

The appeal process for criminal cases is governed by the Japanese Code of Criminal Procedure. While there have been instances where companies have challenged penalty assessments in judicial proceedings, specific information on this process was unavailable.

State or Local Enforcement

Criminal enforcement only exists at the national level in Japan, with no parallel state or local enforcement.

Key Takeaways

  • Japan’s economic sanctions regime is governed by the Foreign Exchange and Foreign Trade Act (FEFTA) and the Act on International Terrorist Assets-Freezing.
  • Violations of these laws can result in criminal penalties, including imprisonment and fines.
  • The government authorities responsible for enforcing these laws include the police, public prosecutors, and the Ministry of Finance.