JAPAN Trends and Developments Contributed by: Yuhei Sakao, Ryota Saito and Shunsuke Ebihara, Miura & Partners
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Overview Despite rapid advances in AI and related technologies, white-collar crime remains a persistent risk. Offences such as fraud, embezzlement, insider trading, data manipulation, cartel activity and bribery continue to be prosecuted in Japan. In fact, the evolution of technol - ogy has facilitated more sophisticated forms of crime and concealment, creating an ongoing challenge for detection and enforcement. While the threat is unlikely to ever be eliminated entire - ly, companies should not adopt a defeatist stance. Effective prevention requires a sound understanding of legal requirements, strict internal compliance, and the establishment of systems such as internal audits and whistle-blowing mechanisms. These structures are essential both for deterring wrongdoing and for enabling prompt and lawful responses when issues arise. Once a white-collar crime is detected, the relevant company must consider various legal measures including disciplinary action, claims for damages, and criminal prosecution, which sometimes require signifi - cant costs and resources. Furthermore, if the crime is regarded as being organisation-wide, it is treated as corporate malfeasance and is subject to the court of public opinion through extensive media coverage. When such corporate malfeasance is detected in Jap - anese companies, many such companies: • establish an investigative committee consisting of lawyers and other members;
• ask the relevant committee to research the facts; and • publish an investigation report drafted by the com - mittee. This is a unique practice in Japan today. The investi - gation report usually includes: • the factual history of the malfeasance; • an analysis of the root causes thereof; and • measures to prevent its recurrence. Some investigative reports published by companies involved in corporate malfeasance state that the root causes are not only issues of personal ethics but also of organisational structures, including internal control, corporate governance and corporate culture. Under such circumstances, it is beneficial for Japanese com - panies to analyse investigation reports published by other companies and utilise them to prevent similar malfeasance. From another point of view, in cases where corpo - rate malfeasance with significant social impact occurs and is widely reported as a serious incident, Japanese laws and regulations related to such corporate mal - feasance are often amended to enable regulation of such malfeasance or to make it more severely punish - able. Therefore, Japanese companies should under - stand and comply with the latest amendments to laws and regulations. This trends and developments report describes recent major legal amendments in Japan related to white-collar crime.
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