METI will enforce penalty to non-compliant company in export control

According to reliable source in Ministry of Economy, Trade and Industry (“METI”), Foreign Exchange and Foreign Trade Law (“FEFTL”) in Japan will be amended within this year so that METI could enforce more solid export control for dual use items to prevent from transferring to military purpose. A new provision will be added in FEFTL, which broaden the penalty range to a non-compliant company in export control.

- Increase the penalty amount of violation of FEFTL export control
Under current law, Persons who have exported controlled items without obtaining the license are subject to a penalty of not more than five years of imprisonment or a fine of not more than two millions yen, or both. If five times the value of such items exceeds two millions yen, the fine shall be up to five-time amount. In addition, as an administrative sanction, the penalty may involve prohibition of export for a period of not more than three years. In 2008, there found some malicious violations of export regulation by Japanese companies, METI consider to increase the penalty amount by revising the FEFTL.

- Introduce penalty to dishonest license application and non-compliance
In 2008, METI made warning to a Japanese machine tool company, who continued to have faulty classification of their products for seven years by intentionally lowering the technical specification to illegally get non-license-required status. Under current law scheme, METI only can give administrative advice or warning, not criminal penalty for such internal non-compliance. By revising FEFTL, new requirement for compliance control will be introduced. A company who deal dual-use items of military use, need to implement solid internal control operation. Faulty export control operation will be subject to METI’s advice to improve, order, and finally criminal penalty in case the company don’t obey to METI’s advice.

Under such condition, Japanese companies continue to carry out thorough export control internally, to monitor the latest regulation and to pay more attention the compliance.