Japan sanctions regime

Japan has a dual sanctions regime consisting of sanctions measures imposed by the UN, together with Japanese autonomous sanctions imposed by the Japanese Government as a matter of its foreign policy.

According to Prime Minister Kishida and Foreign Secretary Hayashi’s statement on 25 February 2022, Japan will take the following additional measures:

• to suspend the issuance of entry visas to Japan for designated individuals related to Russia and freeze the assets held by designated individuals and entities related to Russia in Japan;
• to freeze assets of three Russian banks (VEB.RF, Promsvyazbank, Bank Rossiya) in Japan; and
• to impose sanctions on exports to Russian military-related entities, on exports of controlled items listed on the internationally agreed list and of other dual-use goods such as semiconductors.

Although Japan does not have a law dedicated solely to sanctions, as is the case in other countries, it has implemented trade control initiatives from a security perspective under the  Foreign Exchange and Foreign Trade Act (Act No. 228 of December 1, 1949, the “Act”). Economic sanctions based on export controls and other measures are mainly implemented within the framework of this Act.

A joint announcement was made by the Ministry of Foreign Affairs, the Ministry of Finance and the Ministry of Economy, Trade and Industry (METI) the following day on the details of the measures to be taken under the Act. A summary is given in sections 2 and 3 below.

Economic sanctions

According to the above-mentioned joint announcement, in view of the current international situation in Ukraine, and in order to maintain international peace and security and to contribute to international efforts for international peace aimed at resolving this problem, the Cabinet of Ministers agreed to the following measures, based on the content of the measures recently taken by other major countries (dated: 26 February 2022): 

• Prohibitions on the Issuance and Circulation of New Securities by the Government of the Russian Federation and Other Governmental Agencies of the Russian Federation;
• Prohibitions on the Issuance of Securities by Specified Banks in Japan; and
• Prohibitions on the Export of Items Subject to the International Export Control Regime to the Russian Federation.

Based on this, the following measures under the Foreign Exchange and Foreign Trade Law will be implemented.

Freezing of assets and other measures

• In accordance with a notice issued by the Ministry of Foreign Affairs of Japan on 26 February, measures have been taken against 24 individuals (see below) designated as persons associated with the "Donetsk People's Republic" (self-proclaimed) and the "Luhansk People's Republic" (self-proclaimed) (hereinafter referred to as the "two Republics").
• Payment restrictions: Payment, etc. to the persons designated by the Notification of the Ministry of Foreign Affairs will be subject to permission being granted by the Ministry of Foreign Affairs.

Restrictions on capital transactions

• Capital transactions (deposit contracts, trust contracts, and money loan contracts) with persons designated by the Ministry of Foreign Affairs will be subject to approval.
• Note: Measures such as the freezing of assets of organizations designated as an organization of the Russian Federation will be implemented from March 28, 2022.

Persons subject to asset freeze (persons deemed to be related to the two Republics)

Entities in the Russian Federation subject to an asset freeze

• Bank Rossiya

Address: 2 Rastrelli Square,Litera, St. Petersburg. 191124, Russian Federation

Measures to prohibit the Government of the Russian Federation from issuing and circulating new securities in Japan

• Restrictions on the issuance and offering of securities
  • The issuance or subscription of new securities in Japan by the Government of the Russian Federation and other governmental agencies, etc. (hereinafter referred to as the "Government of the Russian Federation") designated by the Notification of the Ministry of Foreign Affairs (promulgated on February 26, 2022) shall now require a permit from the Ministry of Foreign Affairs.
• Regulations on the acquisition or transfer of securities
  • The acquisition by a resident of Japan of securities newly issued by the Government of the Russian Federation, etc. from a non-resident or the transfer to a non-resident of securities newly issued by the Government of the Russian Federation, etc. shall now require a permit from the Ministry of Foreign Affairs.
• Regulations on Service Transactions
  • The provision of labor or benefits by a resident of Japan for the purpose of issuing or offering new securities in Japan by the Government of the Russian Federation shall be subject to a license system.

Measures to prohibit certain banks of the Russian Federation from issuing securities in Japan

• With regard to certain banks of the Russian Federation which are prohibited from issuing securities in Japan, securities with a shorter maturity (over 30 days) shall be subject to such prohibition.

Government of the Russian Federation or other governmental bodies subject to a ban on the issue or offer of securities

• Government of the Russian Federation
• Government Agencies of the Russian Federation
• Central Bank of the Russian Federation

Address: 12 Neglinnaya Str., Moscow, 107016,Russian Federation

Export controls

The following are enhanced regulations under the Foreign Exchange and Foreign Trade Act and the Export Control Order.

Prohibition of import and export to and from the two Republics

• Measures will be introduced to prohibit the import and export of goods from and to Ukraine (limited to cases where the origin and destination are the "Donetsk People's Republic" (self-proclaimed) or the "Luhansk People's Republic" (self-proclaimed)).

Measures concerning the prohibition of exports to the Russian Federation of items subject to the international export control regime

• With regard to the export to the Russian Federation of the provision of services and items subject to the international export control regime, the examination procedures will be further tightened and measures will be introduced to prohibit such exports.
• The further tightening of examination procedures, which will come into effect on March 5, 2022 means, in concrete terms, that:
  • the export of goods and the provision of technology with a destination in Russia, which were previously subject to blanket licensing, will no longer be subject to blanket licensing, but will require a licence on a case-by-case basis;
  • the documents to be submitted will be changed; and
  • the Ministry of Foreign Affairs will be the place to submit them.

Next steps

We expect that this first tranche of sanctions will likely be extended in the near future and so it would be prudent for anyone engaged in trade in close proximity to Russia and Ukraine to continue monitoring this evolving situation, and verifying the legality of their existing sales operations, as the subject matter and territorial scope of Japanese (and global) sanctions continue to expand.

In the meantime, Hogan Lovells is available to assist you in assessing your exposure and in ensuring compliance with Japanese sanctions measures in your transactions. Please let us know if you have any questions and if we can assist with your sanctions review in any way.

In the current, rapidly changing landscape, keeping on top of international sanctions regimes is more challenging than ever. Our comprehensive Sanctions Navigator collates sanctions regimes from the European Union, France, the United Kingdom, United Nations, and United States in one place, to help our clients answer any questions or address any sanctions-related issues they may have. Explore the Sanctions Navigator here.

Authored by Noriko Ishifuji.