JAPAN Trends and Developments Contributed by: Takashi Koyama and Tomomi Fukutomi, Oh-Ebashi LPC & Partners
Introduction Japan’s sanctions regime mainly comprises financial sanctions, trade sanctions and travel sanctions. For implementation of these measures – particularly finan - cial and trade sanctions – Japan relies principally on the Foreign Exchange and Foreign Trade Act (FEFTA) rather than a standalone “Sanctions Act”. More pre - cisely, the FEFTA supplies the core, transaction-based framework, and is complemented by several measure specific statutes, including the “Act on Special Meas - ures Concerning Freezing of Assets Implemented by Japan in Light of the United Nations Security Council Resolution 1267”, “Act on Special Measures Concern - ing Cargo Inspections Conducted by the Government Taking into Consideration United Nations Security Council Resolution 1874” and “Act on Special Meas - ures Concerning Prohibition of Entry of Specified Ships into Ports”. In addition, sanctions concerning the entry and exit of persons are implemented under statutes outside the FEFTA, notably the Immigration Control and Refugee Recognition Act. Together, these instruments form the basic legal infrastructure through which Japan operationalises sanctions. Furthermore, while the FEFTA sets out the funda - mental principles, the detailed operational provisions are established through Cabinet Orders, Ministerial Orders and Ministerial Notices. Accordingly, when confirming the specific procedures for implementa - tion of sanctions, it is necessary to review not only the FEFTA but also the relevant Cabinet Orders, etc. Under the FEFTA, sanctions are implemented through a comprehensive set of regulatory tools that govern, inter alia: • financial sanctions: (a) payments – restrictions on remittances and settlement of obligations; and (b) capital transactions – permission requirements for loans and other cross-border capital trans - actions; and • trade sanctions – approval/permission require - ments for goods, services, and technology trans - fers. At the basic level, the FEFTA adopts a “minimum nec - essary control” principle based on the foundation of
free international transactions. Restrictions on trans - actions are imposed to the minimum extent neces - sary to control or co-ordinate foreign transactions to maintain peace and security in Japan and in the inter - national community. In the context of sanctions measures, the FEFTA regu - lations are applied when necessary to: • fulfil Japan’s obligations under a treaty or any other international agreement that it has concluded (eg, United Nations Security Council (UNSC) obliga - tions); • contribute to international efforts towards interna - tional peace in concert with like-minded states (eg, the G7, the EU and the USA); or • implement Cabinet decisions safeguarding national peace and security. Legal and Institutional Framework The chapters of the FEFTA relevant to sanctions include those governing payments, capital transac - tions and trade. The FEFTA also applies to acts con - ducted outside Japan if they involve Japanese resi - dents or agents/employees of Japanese companies acting in relation to their assets or business. As for the institutional framework, three ministries – MOFA, MOF and METI – effectively co-operate in the domestic implementation of sanctions. The Ministry of Foreign Affairs (MOFA) designates indi - viduals and entities subject to sanctions, while actual enforcement measures are carried out by the Ministry of Finance (MOF) and the Ministry of Economy, Trade and Industry (METI). The consolidated list of individu - als and entities subject to sanctions is available on MOF’s website (available only in Japanese). MOF is primarily responsible for financial sanctions – ie, asset freezes, payment restrictions, other capital market measures, and restrictions on certain transactions for services between a resident and non-resident, whereas METI principally oversees trade sanctions on goods and technology as well as a part of payment and capital transactions – eg, directly associated with import/export transactions, and transactions concern - ing the transfer or establishment of rights to use min - ing rights and industrial property rights. To facilitate
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