Financial Crime World

Here is the article in Markdown format:

Japan’s White-Collar Crime Landscape: A Comprehensive Guide

In a bid to combat white-collar crime, Japan has put in place a robust legal framework that aims to protect its corporate and financial sectors from fraudulent activities. In this article, we will delve into the various laws and regulations that govern white-collar crimes in Japan, with a focus on criminal company law, bribery, insider dealing, market abuse, and banking crime.

Criminal Company Law and Corporate Fraud

The Companies Act imposes strict sanctions against corporate executives who engage in fraudulent conduct. Under Article 960 of the CA, directors or other corporate executives who commit an act in breach of their duties and cause financial damage to the company for personal gain or that of a third party can be imprisoned for up to ten years and/or fined up to JPY10 million.

Bribery and Influence Peddling

  • The Penal Code criminalizes accepting, soliciting, or promising to accept bribes in connection with public officer duties.
  • Giving, offering, or promising to give bribes is punishable by imprisonment with labor of up to three years or a fine of up to JPY2.5 million.
  • The Unfair Competition Prevention Act also prohibits giving, offering, or promising to give money or benefits to foreign public officers in exchange for favors.

Anti-Bribery Regulation

While there is no specific statute that imposes criminal or administrative sanctions on companies for failing to prevent employee bribery, the Companies Act requires directors to establish an internal control system that includes measures to prevent illegal conduct. Failure to do so can constitute a breach of a director’s duty of care and result in civil liability.

Insider Dealing, Market Abuse, and Criminal Banking Law

  • The Financial Instruments and Exchange Act prohibits insider trading by corporate insiders who possess material non-public information about listed companies. Insider trading is punishable by imprisonment of up to five years and/or a fine of up to JPY5 million.
  • The FIEA also prohibits various forms of market manipulation, including:
    • Conducting a series of trades that mislead other investors
    • Influencing market prices
    • Engaging in wash sales or collusive trading
    • Disseminating false information about securities

Banking Crime

Various fraudulent conducts by financial institutions against regulators or customers are prohibited under the Banking Act or other relevant regulations. For example:

  • Providing fraudulent explanatory documents prior to contract can result in imprisonment of up to six months and/or a fine of up to JPY500,000.

Tax Fraud

Tax evasion is punishable under Japanese tax laws, with penalties including imprisonment, fines, and additional penalty taxes.

Conclusion

Japan’s white-collar crime landscape is characterized by a complex web of laws and regulations aimed at protecting its corporate and financial sectors from fraudulent activities. This article provides a comprehensive guide to the various types of white-collar crimes in Japan, as well as the legal frameworks that govern them.

Contributed by: Yoshihiko Matake and Ayumi Fukuhara, Nagashima Ohno & Tsunematsu