JAPAN Trends and Developments Contributed by: Takashi Koyama and Tomomi Fukutomi, Oh-Ebashi LPC & Partners
tion measures mainly require permission from the Minister for Finance before execution. Trade ban The import or export of goods or technology subject to sanction measures requires prior approval from the Minister for Economy, Trade and Industry, while the export of services from a resident to non-resident sub - ject to sanction measures requires prior permission MOF has issued the Guidelines on Compliance with the FEFTA for Foreign Exchange Dealers, which set out its interpretation and expectations under the FEF - TA. These guidelines require foreign exchange deal - ers (including banks) to establish robust internal com - pliance systems to ensure adherence to the FEFTA obligations. In practice, MOF may receive reports of suspicious transactions from banks operating under these compliance frameworks. Trade from the Minister for Finance. Supervisions and inspections Payment transactions Customs inquiries/inspections under the Customs Act often serve as the starting point for investigations into potential violations of sanctions measures. These inquiries/inspections can trigger further inquiries into prohibited exports or imports. In addition to the above, Japanese parties involved in transactions may voluntarily notify authorities of activities that could fall under sanctions, supporting proactive compliance and enforcement. Enforcement Administrative measures Authorities may impose the following administrative actions for violations of sanction measures: • order to suspend service transactions – an admin - istrative order prohibiting the conduct of service transactions for a period of up to one year; • order to suspend import/export of goods – an administrative order prohibiting the import or export of goods for a period of up to one year (or up to three years in cases involving violations of
Japan’s autonomous sanctions measures imposed by Cabinet decision); • order to prohibit assuming an executive position – an administrative order prohibiting a violator from assuming any executive position (such as repre - sentative, director, executive officer) in the relevant company for the same period of the above suspen - sion; • formal warnings – written warnings to companies or individuals for non-compliance; and/or • publication of enforcement actions – disclosure of the names of violators to deter future violations. Criminal penalties In addition to the administrative sanctions, violations of sanctions measures under the FEFTA may result in criminal consequences. Engaging in financial transactions ( payments and capi- tal transactions ) and transactions for services without the required permission may lead to: • imprisonment for up to three years; and/or • a fine of up to JPY1 million. If three times the value of the transaction exceeds JPY1 million, the maximum fine increases to three times the transaction value. Conducting trade in goods and technology ( import or export transactions ) without approval may result in: • imprisonment for up to five years; and/or • a fine of up to JPY10 million. If five times the value of the transaction exceeds JPY10 million, the maximum fine increases to five times the transaction value. Case Studies: Russia, North Korea and Iran Russia: multi-channel controls and anti- circumvention In response to Russia’s invasion of Ukraine, Japan has repeatedly expanded sanctions measures under the FEFTA in co-ordination with the G7, the EU and the USA, including asset freezes, payment restrictions, restrictions on outward investment in a Russia-relat - ed company, trade (import/export) restrictions and
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