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Official Statements

Content of Japan's Iran Sanctions

Saturday, September 4, 2010

Sobashima

The following is a decription of the content of Japan's new sanctions on Iran as offered by the Foreign Ministry on September 3:

Accompanying Measures Pursuant to United Nations Security Council Resolution 1929

In connection with the Iranian nuclear issue, the Government of Japan (hereafter referred to as "the Government") has been faithfully implementing a series of measures on Iran's nuclear activities based on United Nations Security Council (UNSC) resolutions 1737, 1747 and 1803.

Since the adoption of the UNSC resolution 1929, Japan announced on August 3rd 2010 its domestic measures to implement the resolution, and on September 3rd 2010, the Government decided to implement the following measures based on UNSCR 1929.

1. Non Proliferation

(1) Additional Designation of Entities and Persons Subject to Asset Freeze (for banks, refer to 2(1) below) and Travel Ban

88 entities and 24 persons that could contribute to Iran's nuclear activities are designated by the Ministry of Foreign Affairs Notice (issued on September 3rd), and their assets are frozen based on the Foreign Exchange and Foreign Trade Act (hereafter referred to as "the Foreign Exchange Act"). A travel ban is issued, in addition to the asset freeze, for the designated persons.

(2) Export Control

The Government has already been implementing and will continue to implement a strict export control on the transfer of all Australia Group-listed and Wassenaar items to Iran under the Foreign Exchange Act.

2. Financial

(1) Termination of Correspondent Banking Relationships with Designated Iranian Banks Through Asset Freeze

15 Iranian banks that could contribute to Iran's nuclear activities are designated by the Ministry of Foreign Affairs Notice (issued on September 3rd), and their assets are frozen based on the Foreign Exchange Act, with the effect that correspondent banking relationships with those banks are halted.

(2) Expansion of Restriction on Transfer of Funds and the Concomitant Obligation of Financial Institutions to Scrutiny
Prohibition on transfer of funds is expanded to cover the following transactions:

(a) Trade related transfer of funds from Japan to Iran, which relates to Iran's nuclear activities (as designated by the Ministry of Foreign Affairs Notice issued on February 16, 2007) or to Iran's activities pertaining to the supply of large conventional weapons (as designated by the Ministry of Foreign Affairs Notice (issued on August 3, 2010)),

(b) All transfer of funds from Iran to Japan, which relates to Iran's nuclear activities (as designated by the Ministry of Foreign Affairs Notice issued on February 16, 2007) or to Iran's activities pertaining to the supply of large conventional weapons (as designated by the Ministry of Foreign Affairs Notice issued on August 3, 2010) With the expansion of restriction on transfer of funds both to and from Iran, obligation of financial institutions to scrutinize is expanded concomitantly.

(Note)

Non-trade-related transfer of funds from Japan to foreign countries including Iran, which relates to Iran's nuclear activities (as designated by the Ministry of Foreign Affairs Notice issued on February 16, 2007) or to Iran's activities pertaining to the supply of large conventional weapons (as designated by the Ministry of Foreign Affairs Notice issued on August 3, 2010), have already been prohibited under the Foreign Exchange Act. Financial institutions, on their part, are subject to obligation to scrutinize such transactions.

(3) Reporting Requirements for Financial Institutions and Special On-sight Examinations by the Government

To enhance vigilance over transfer of funds between Japan and Iran, financial institutions domiciled in Japan are subject to monthly reporting requirements concerning all Iran-related transfers (ordinance as per Article 55-8, Foreign Exchange Act). In addition, the Government will conduct special on-sight examinations on financial institutions domiciled in Japan in order to ensure that they are adequately discharging their obligation to scrutiny as per Article 68, Foreign Exchange Act.

(4) Prohibition of Insurance to Iran

The Government prohibits the provision of insurance/reinsurance services by Japanese companies, if activities covered by such insurance/reinsurance services could contribute to Iran's nuclear activities or to Iran's activities pertaining to the supply of large conventional weapons.

(5) Prohibition of Brokering of Securities Related to Iran
The Government prohibits the provision of brokering services both in primary and secondary markets by Japanese companies for securities issued by Iranian entities, if those securities could contribute to Iran's nuclear activities or to Iran's activities pertaining to the supply of large conventional weapons.

(6) Prevention of Establishment of New Correspondent Banking Relationships With Any Iranian Banks

The Government prevents the establishment of new correspondent banking relationships with any Iranian banks. An advisory letter is issued by the Government to make it clear to the banks domiciled in Japan that they are not to open new correspondent banking relations with any Iranian banks.

(7) Prohibition of Opening of Branches / Subsidiaries

Should any Iranian financial institution apply for license for opening branches / subsidiaries, or should any Japanese financial institution apply for license for opening branches / subsidiaries in Iran, the Government will not authorize such applications in accordance with the Banking Act.

(8) Scrutiny of Customer Identification / Reporting of Any Suspicious Transactions to the Authorities

The Government advises financial institutions to secure a strict implementation of measures described above, and furthermore, to scrutinize customer identifications as required by the Foreign Exchange Act and the Act on Prevention of Transfer of Criminal Proceeds, and to file reports with the authorities upon detection of any suspicious transactions, as per the Act on Prevention of Transfer of Criminal Proceeds.

3. Trade

The Government announces that JBIC and NEXI will not enter into new medium to long-term (2years or over) commitments for an export credit for trade with Iran taking all circumstances into consideration. In addition, NEXI exercises utmost due diligence with strict conditions (e.g., maximum repayment period will not exceed one year) when providing a short-term export credit for trade with Iran.

4. Transportation

The Government designates Islamic Republic of Iran Shipping Lines (IRISL) and its subsidiary entities as being subject for asset freeze based on the Foreign Exchange and Foreign Trade Act.

5. Energy

(1) The Government shall halt all new oil/gas-related investment by not entering into new medium to long-term commitments for export credit for trade with Iran.

(2) The Government informs the industries of the UNSC resolution 1929, including its preamble and promotes awareness about transactions with Iran.

(3) The Government sends administrative guidance to all oil and gas related associations that requires them to refrain from all new oil and gas projects (including relevant significant transactions) such as exploration and development of refining capacity and to take every caution in transactions based on existing contracts.

Ministry of Foreign Affairs (Japan)