Japan’s Economic Sanctions against Russia

II. Export and Import Control

(i) Export Restrictions

On February 26, March 1, March 3, and March 8, 2022, the Cabinet of Japan approved the introduction and expansion of export prohibitions under the Foreign Exchange Act. Based on those approvals, the Export Trade Control Order (subordinate legislation of the Foreign Exchange Act) was amended with effect as of March 18, 2022. Under the amended Export Trade Control Order, the following exports are generally prohibited unless an export license is granted※1:

• (a) export of items to Russia and Belarus that are subject to multilateral export control regimes (e.g., machine tools, carbon fibers, high-performance semiconductors);
• (b) export of goods to certain organizations related to Russia and Belarus (including the Russian Ministry of Defense, Russian aircraft manufacturers, and other military-related organizations);
• (c) export to Russia and Belarus of certain multi-purpose goods (e.g., semiconductors, computers, telecommunications equipment) that are considered to contribute to reinforcing Russia’s military capabilities;
• (d) export to Russia of equipment for refining petroleum; and
• (e) export to the so-called “Donetsk People’s Republic” and “Luhansk People’s Republic” (“Donetsk and Luhansk”).

(ii) Import Restrictions

Under the Import Trade Control Order (subordinate legislation of the Foreign Exchange Act) and a related government notice, it is prohibited to import goods originating from Donetsk and Luhansk as of February 26, 2022.

III. Asset Freezing

The Japanese government has also applied asset freezing measures to certain designated individuals and entities related to Russia, Belarus, or Donetsk and Luhansk. The list of designated individuals and entities has been expanded several times since first being published on February 26, 2022. Since then the following entities and individuals have been newly designated (“Sanctioned Parties”):

• 34 entities related to Russia and Belarus (including the Central Bank of the Russian Federation and VTB Bank);
• 95 individuals related to Russia and Belarus (including the Russian President, the Belarusian President, and certain number of oligarchs); and
• 54 individuals affiliated with Donetsk and Luhansk.

Under the asset freezing measures, the following acts may not be carried vis-à-vis the Sanctioned Parties unless with permission by the Japanese government (provided that the prohibitions will become effective only as of March 28, 2022):

• (a) any payment to the Sanctioned Parties; and
• (b) any capital transaction with the Sanctioned Parties (such as deposit, trust, or loan agreements) .

IV. Other Economic Sanctions

In addition to the measures mentioned above, the following economic measures have also been imposed by the Japanese government:

(i) Restrictions on securities transactions

• (a) Issuance and offering of securities
  The new issuance or offering of securities by the government of the Russian Federation, and other government agencies designated by the Japanese government (collectively, the “Russian Government”) in Japan are prohibited unless prior permission is obtained from the Minister of Finance.

• (b) Acquisition and transfer of securities
  The acquisition by residents of Japan from non-residents, or the transfer by residents of Japan to non-residents, of securities that are newly issued by the Russian Government is prohibited unless prior permission is obtained from the Minister of Finance.
• (c) Provision of security-related services
  The provision by residents of Japan of services or benefits for the purpose of the issuance or offering of securities by the Russian Government in Japan is prohibited unless prior permission is obtained from the Minister of Finance or the Minister of Economy, Trade and Industry.

(ii) Prohibition of the issuance of securities in Japan by certain Russian banks

Certain designated Russian banks are prohibited from issuing or offering securities in Japan with a maturity over 30 days.

The Japanese economic sanctions are based on a complex system of subordinate legislation and governmental notices under the Foreign Exchange Act. The sanctions have been constantly amended and tightened almost on a daily basis. Depending on how the situation will develop, additional sanctions against Russia in alignment with Western countries can be expected. Businesses operating in Japan would be well-advised to keep abreast of any new developments and how the current and future economic sanctions may affect their business.