III. TRENDS IN GOLD BULLION SMUGGLING
1. Seizures of Smuggled Gold Bullion
In order to cope with the smuggling of gold bullion, which has increased rapidly since2014, Japan Customs formulated and published "Emergency Countermeasures to 'Stop
Gold Smuggling'" in November 2017 with the aim of strengthening inspections, tightening
penalties, and enhancing the collection and analysis of information. After the upper limits ofpenalties were raised in April 2018, the number of seizures and seized amount bothdecreased significantly.
< Seizures of Smuggled Gold Bullion >The number of seizures of smuggled gold bullion*1 during the one-year period fromJanuary to December of 2020 was 51 cases (down by 16% from the previous year), andthe amount of seized gold bullion was approx. 150 kg (down by 53% (id.)), both showing
decreases.
*1 Gold bullion includes partially processed gold products, in addition to gold ingots.

Seizures of smuggled gold bullion during the past 10 years
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

17

18

12

119

465

811

1,347

1,086

61

51

63

79

133

449

2,032

2,802

6,277

2,054

319

150

Number ofseizures (cases)
Seized amount(kg)(Note) Figures for 2020 are provisional.

Out of the 51 seizures of smuggled gold bullion during the one-year period from January
to December of 2020, approx. 90%, or 46 cases, were committed by air passengers or theuse of air cargo.
By source, 98% were smuggled from Asia.
Seizures of smuggled gold bullion (2020)[By mode of transport][By source]
Mode oftransport
Air passengers

Number ofseizures(cases)21

Seized amount(kg)15

Air cargo

25132

Ship crews

53Total51150< Major seizures of smuggled gold bullion >Customs accused two SouthKoreans who attempted to smuggle
approx. 30 kg of gold bullion by
the use of air cargo from Hong Kongof violating the Customs Act.
(Dec. 2020; Tokyo Customs)

OthersHong 4Kong
6

Taiwan17

South Korea
10
China142. Mechanism of Gold Bullion Smuggling
Gold bullion smuggling is considered to be committed with the aim of selling gold bullion,
which was smuggled without reporting and paying consumption tax, to domestic buyers andthereby gaining proceeds equivalent to the amount of consumption tax.
For example, when importing 5 kg of gold bullion at a price of 5 million yen per kg (25million yen), it is necessary to pay 2.5 million yen (25 million yen×10%) as consumption tax
at a customs office. However, if a smuggler evades consumption tax and a domestic buyerpurchases gold bullion thus smuggled at a price including consumption tax (25 million yen),
the smuggler gains the portion of consumption tax as his/her proceeds.
Such proceeds gained through gold bullion smuggling seem to be taken abroad and used
for purchasing gold bullion again. Gold bullion smuggling is often committed in an organizedmanner.
On the other hand, smuggled gold bullion that was purchased by buyers is to be placed ona regular distribution channel, and the portion exceeding the domestic demand will beexported and traded in international gold markets.
Supposing that gold bullion smuggling is committed under this mechanism, proceeds fromsmuggling are likely to become a capital source of crime organizations.
Mechanism of gold bullion smuggling (example)