Reiwa 6 (Wa) No. 173 Case of Foreign Exchange and Foreign Trade Act Violation and Customs Act Violation

In 2025, Takeshi Kato, president of Sakura Trading Co., was prosecuted before the Tokyo District Court for violating Japan's Foreign Exchange and Foreign Trade Act and the Customs Act. The indictment alleged that Kato illegally exported high-grade carbon fiber materials classified as strategic goods to a company in South Korea without the required license from the Ministry of Economy, Trade and Industry. To conceal the scheme, the defendant made false customs declarations describing the shipment as low-value textiles, thereby evading significant duties. The case was investigated by Tokyo Customs and the Metropolitan Police Department. The trial focused on whether the materials fell under export control lists and whether Kato acted with intent to circumvent sanctions. On November 12, 2025, the court found Kato guilty, sentencing him to two years in prison suspended for three years, and imposed a fine of 5 million yen; the company was fined 10 million yen. The ruling underscored Japan's strict enforcement of trade laws and exacerbated ongoing trade tensions with South Korea.

Takeshi Kato sentenced to two years in prison, suspended for three years, and fined 5 million yen; Sakura Trading Co. fined 10 million yen.

Whether the exported carbon fiber materials constituted controlled items under the Foreign Exchange and Foreign Trade Act, and whether the defendant knowingly made false customs declarations with intent to evade tariffs and circumvent export restrictions.

The case heightened public scrutiny over Japan-South Korea trade relations, led to calls for tighter corporate compliance with export controls, and served as a deterrent against similar illicit transfers of strategic materials.