Introduction of Japan's first plea bargaining system
In May 2016, the Japanese legislature introduced its first plea bargain system by amending the Criminal Procedure Code.
The new system will come into effect by June 2018. It will allow a prosecutor to enter into a formal plea bargain agreement with a natural person or corporate entity who is a suspect or defendant in a criminal case. The offences covered by the system which are relevant to corporates include: bribery; fraud; embezzlement; tax and antitrust-related offences; and offences relating to the trading of financial products.
A prosecutor may enter into an agreement to drop or reduce the cooperating party's criminal charges or can agree to a pre-determined sentence. In return, the cooperating party must agree to provide evidence (or assist in its gathering) relating to certain criminal offences committed by a third party. It is not sufficient for the individual to provide information solely regarding their own potential offences in exchange for the plea bargain but he must provide evidence relating to an offence that is wholly unrelated from his own alleged conduct.
Before entering into any plea bargain, the prosecutor must consider a number of factors. These include: the significance of the criminal conduct of the third party; the value of the evidence that the cooperating party has agreed to provide; and the relative seriousness of the charge against the cooperating party when compared with the proposed charges against the third party.
Bitcoin falls under money laundering and know-your-customer rules
Since 1 April 2017, bitcoin has been recognised in Japan as a legal method of payment, with the result that it falls within existing money laundering and know-your-customer rules. The Japanese legislature passed the law following extensive debate. The Financial Services Agency has said that its introduction imposes capital requirements on bitcoin exchanges as well as obligations regarding cybersecurity and internal operations.
Shoko Chukin Bank sanctioned for fraudulent financing
On 9 May 2017, Japanese regulators issued a "business improvement order" to Shoko Chukin Bank, in response to its involvement in fraudulent financing practices following the global financial crisis in 2008.
The practices in question involved implementing a low-interest rate financing program to assist small and medium sized companies in managing difficulties resulting from natural disasters and economic crises. A third-party panel, commissioned by the bank, had found that 816 loans, worth approximately ¥20 billion ($180 million) had been made to ineligible borrowers.
The business improvement order requires Shoko Chukin to investigate the full 220,000 customer accounts held under the financing program in order to identify any further issues. It was also told to clarify its management's roles and responsibilities in relation to the program and to introduce appropriate corrective measures.
The bank has until 9 June 2017 to submit a roadmap setting out how it will conduct its investigation and its business improvement plan.
Bankrupt travel agency admits to overstating profits
Tellmeclub, a budget travel agency which offered overseas tours to customers, has admitted to misrepresenting its finances since 2014. This information came to light in the documentation it filed in the context of its bankruptcy proceedings.
As an example of its conduct, Tellmeclub previously reported that it had achieved operating profits of ¥110 million for its financial year ending September 2016. Contrastingly, it had incurred an operating loss of more than ¥1.5 billion. Its bankruptcy filing admits that its reporting gave the misleading impression that it was making a profit by underreporting sales costs and administrative expenses. According to the company's legal representation, it owes a total of ¥15.1 billion, including ¥9.9 billion to 36,000 customers for tickets that were never issued.
Tellmeclub was also found to have submitted varying financial documentation to banks and the tax authority so that it could continue to receive financing.