JAPAN Law and Practice Contributed by: Makoto Terazaki, Taku Matsumoto, Suguru Yokoi, Naoko Takasaki and Jun Suzuki, Anderson Mori & Tomotsune
4.4 Licences, Derogations and Exceptions Under Japan’s sanctions regime, the legal framework is generally structured not as an outright prohibition of sanctionable transactions, but rather as a licensing system under which the relevant competent minis - ter’s approval is required and which, in practice, is not granted as a general rule. Accordingly, where a party seeks to engage in conduct covered by sanc - tions measures, it must apply for the relevant approval and seek to obtain it on an exceptional basis. For example, in the case of exports or transfers of technology subject to sanctions, application for an export licence must be made. In the case of pay - ments to designated persons, capital transactions such as deposit or loan transactions, and certain ser - vice transactions, an individual licence from the MOF must be sought. The circumstances in which approv - al may exceptionally be granted vary depending on the particular sanctions measure, but approval may, for example, be available in relation to humanitarian assistance. 4.5 Extraterritorial Sanctions and Secondary Sanctions Risk Japanese sanctions legislation does not provide for extraterritorial application. 4.6 Sanctions Compliance Programmes Under Japanese law, there are no statutory require - ments for a compliance programme specifically tai - lored to defence-related companies. METI recom - mends that exporters file a compliance programme to METI, but such filing is voluntary. That said, the FEFTA requires exporters that repeat - edly and continually export goods or provide technol - ogy to comply with the exporter compliance stand - ards. These standards are statutory obligations and include, for example, appointing a person responsible for classification determinations, ensuring that per - sonnel engaged in export operations are informed of the latest FEFTA and related regulations, and provid - ing the guidance necessary for compliance. Where the exporter exports list-controlled items for which an export licence is required, additional requirements apply. In practice, compliance programmes are gen -
erally prepared in light of these exporter compliance standards. As for the content of compliance programmes, the Center for Information on Security Trade Control (CISTEC) has prepared a model compliance pro - gramme, which is frequently used as a practical ref - erence. METI’s guidance on security export control is also an important source for understanding METI’s compliance expectations. 4.7 Enforcement, Penalties and Voluntary Disclosure For violations of financial and trade sanctions, criminal liability may be imposed. For violations of export or import restrictions, the potential penalties for an indi - vidual offender are imprisonment for up to five years or a fine of up to JPY10 million (but no more than five times the value of a transaction violating the sanc - tions), or both. In addition, a company for which the offender works may also be subject to a fine of up to JPY500 million, but no more than five times the value of a transaction in breach of the sanctions. For violations of export or import restrictions, METI may ban exports or imports for up to three years or prohibit an individual offender from engaging in the activities of a company in a specified business as a director or an officer for up to three years. Japanese sanctions legislation does not establish a general formal voluntary disclosure programme or a general statutory obligation for defence-sector com - panies to self-report sanctions violations. However, in practice, voluntary internal review, prompt self-report - ing to the competent authority and the implementation of remedial and preventative measures may be taken into account when the authorities determine whether, and to what extent, enforcement action should be taken. Accordingly, voluntary disclosure may operate as a mitigating factor, although there is no formal guar - antee of immunity or reduction of penalties. 4.8 Recent Enforcement Actions and Developments No significant sanctions enforcement action specifi - cally involving a defence-sector participant has been publicly reported in Japan during the past 12 months.
125 DEFENCE CONTRACTS 2026
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