Japan’s Financial Institutions Emphasize Due Diligence Procedures Amid Growing International Trade Risks

Introduction

With the increasing global economic uncertainty, Japanese financial institutions are taking a closer look at due diligence procedures to mitigate potential risks and ensure fair business dealings. U.S. companies operating in Japan or doing business with Japanese entities must take proactive steps to establish thorough due diligence protocols.

Why Due Diligence Matters in Japan

• Japan’s corporate reputation for fair dealing is well-established, but instances of questionable business practices and financial issues may arise.
• Customers, importers, wholesalers, and distributors may face difficulties in securing trade financing or credit if they don’t conduct thorough due diligence.
• Engaging the services of a competent Japanese attorney (bengoshi), patent practitioner (benrishi), or other legal professional is crucial for reviewing contracts, filings, and registrations.

Utilizing the International Company Profile Service

The U.S. Commercial Service in Japan offers an International Company Profile (ICP) service to assist U.S. companies in evaluating potential business partners by conducting comprehensive company background checks. However, it’s essential to note that the ICP is not a substitute for a thorough due diligence review to meet obligations under the Foreign Corrupt Practices Act of 1977.

Establishing Robust Due Diligence Procedures

Industry experts recommend that U.S. companies establish robust due diligence procedures and scrutinize the bona fides of their Japanese agents, distributors, and customers. By taking proactive steps to mitigate potential risks, U.S. companies can ensure fair business dealings and maintain a strong reputation in Japan’s competitive market.

Resources for Due Diligence Procedures

The U.S. Commercial Service, with its network of 108 offices across the United States and over 75 countries, is committed to helping U.S. companies navigate international trade complexities and grow their global presence. For more information on due diligence procedures and other trade-related services, visit export.gov/usoffices.