Japan sanctions: What you need to know

Japan is an influential regional and global power and participates in a range of trading relationships with partners across the world. Japan uses that status to achieve political and economic goals, often issuing economic sanctions against other countries in response to violations of international law, acts of political oppression, and transgressions against human rights.

Regional Japan sanctions

Regionally, Japan’s sanctions landscape is growing increasingly complex and fluid, with both China and Russia developing and implementing domestic autonomous sanctions programs that affect their neighbors and trading partners. Firms that operate in Japan, or that do business with Japanese partners, should understand Japan’s sanctions regime in order to ensure effective compliance and to contribute to the fight against international economic crime.

What is Japan’s sanction regime?

While there is no single article of legislation that provides a mechanism for imposing sanctions in Japan, the Japanese government uses a combination of regulations in order to do so. The principal regulation that Japan uses to impose sanctions is the Foreign Exchange and Foreign Trade Act (FEFTA). Originally passed in 1949 as part of Japan’s political and social reconstruction following the Second World War, FEFTA is primarily focused on the trade of cross-border goods, services, and finances but enables the Ministry of Economy, Trade and Industry (METI), working in conjunction with the Ministry of Finance, to implement sanctions in order to:

• Meet Japan’s international obligations under relevant treaties and agreements.
• Contribute to international peace and security.
• Maintain Japan’s peace and security.

As a member of the United Nations, Japan also derives major aspects of its sanctions policy from United Nations Security Council (UNSC) resolutions – the majority of which are issued in alignment with the objectives of the sanctions objectives set out in FEFT. Beyond its FEFTA and UNSC obligations, in certain circumstances Japan will implement unilateral sanctions. It may also implement sanctions that reflect its commitments to other countries and international organizations, such as the US or the EU.  

Firms operating in Japan must ensure compliance with the Japan sanctions regulations by implementing a suitable sanctions screening software, and ensure that they check new customers against the Ministry of Finance’s Japan sanctions list.

Japan sanctions on North Korea

The Democratic People’s Republic of North Korea (DPRK) has a well-established regional and international reputation for disruptive and illegal activity, including breaches of nuclear proliferation agreements, human rights abuses, and cybercrime. Accordingly, North Korea is a major focus of Japan’s unilateral sanctions regime: in 2006, Japan imposed an import embargo on North Korea, and followed that measure up in 2009 with an export embargo. The measures are in alignment with the positions of the UNSC and most Western governments, including the US, the UK, and the EU. 

Like other jurisdictions, Japan imposes a range of additional economic restrictions on North Korea, with criminal and civil punishments for non-compliance. Persons that conduct financial activities with North Korea face fines up to 1 million yen, and three years in prison. Similarly, persons that breach trade restrictions with North Korea face fines of up to 10 million yen and five years in prison. 

In April 2021, Japan responded to North Korea’s continued efforts to develop long-range nuclear weapons by extending the Japan sanctions program for two years. The embargoes, which had been due to expire on April 13, will now remain in place until 2023.

Japan sanctions on Iran

In 2016, the Joint Comprehensive Plan of Action (JCPOA) allowed Iran access to the international financial system in exchange for limiting its pursuit of enriched uranium. The deal prompted many nations, including Japan, to lift or relax their Iran sanctions regimes. However, in 2018, President Trump withdrew the US from the JCPOA, casting the future viability of the agreement into doubt. In response to the US’ withdrawal, Japan, along with many European nations, ceased business operations with Iran pre-emptively.

Japan human rights sanctions

In order to address human rights abuses, many Western governments have implemented ‘Magnitsky-style’ sanctions programs – named for the Magnitsky Act implemented by the US in 2016. Magnitsky-style sanctions enable governments to punish specific human rights violations, targeting individuals and organizations rather than entire countries. 

In 2021, Japanese lawmakers revealed a proposal for the development of a Japanese Magnitsky-style sanctions program. The move was prompted by a desire to follow the US, the UK, and the EU in imposing penalties against China for its treatment of Uyghur Muslims. The proposal is a cross-party initiative and intended to remedy Japan’s status as the only G7 nation without a dedicated human rights sanctions program.