Financial Crime World

Japan Tightens Sanctions Regime: All You Need to Know About OFAC Compliance in Japan

Introduction

Japan’s sanctions regime is designed to ensure compliance with United Nations (UN) resolutions and impose autonomous sanctions on countries deemed threats to international peace. This article provides an overview of Japan’s sanctions regime and guidance on how businesses can comply with OFAC regulations in the country.

Who is Covered by Japan’s Sanctions Regime?

  • Japanese residents, including natural persons and legal entities
  • Branch offices and local offices of non-residents operating in the country
  • Acts committed abroad by representatives, agents, employees, or other workers of Japanese companies

Implementing UN Sanctions and Autonomous Sanctions

  • Japan implements sanctions regimes based on UN resolutions
  • Maintains an autonomous sanctions program targeting North Korea
  • Coordinates with the United States, European Union countries, and other international partners to contribute to global peace

Key Legislation: Foreign Exchange and Foreign Trade Act (FEFTA)

  • The primary legislation governing Japan’s sanctions regime
  • Prohibits certain exports, imports, services, and fund transfers
  • Empowers relevant authorities to freeze assets
  • Immigration laws can restrict the movement of certain individuals

Lists of Sanctioned Entities and Individuals

  • Japan maintains a list of sanctioned entities and individuals
  • No other lists related to sanctions in the country

Licensing and Authorization System

  • The Ministry of Finance, Japan (MOFJ) and the Ministry of Economy, Trade and Industry (METI) can grant permission to exempt specific activities or transactions from financial sanctions under the FEFTA
  • A detailed follow-up inspection system is in place for suspicious items, including on-site inspections

Consequences of Sanctions Breach

  • Violations of Japan’s sanctions regime can result in severe penalties, including:
    • Up to 10 years’ imprisonment with labor and/or a fine of up to ¥10 million or five times the subject matter of the violation, whichever is greater

Regulators and Contact Details

  • Key regulators responsible for enforcing Japan’s sanctions regime:
    • Ministry of Foreign Affairs
    • Ministry of Finance, Japan (MOFJ)
    • Ministry of Economy, Trade and Industry (METI)

Businesses operating in Japan must comply with the country’s sanctions regime to avoid significant legal and reputational risks. It is essential to understand the requirements and regulations governing OFAC compliance in Japan to ensure successful operations.

For further guidance on OFAC compliance in Japan, contact Eiji Kobayashi, Partner at Anderson Mori & Tomotsune, at [insert contact details].