Emergency Countermeasures to“Stop Gold Smuggling”

November 7, 2017
The Customs and Tariff Bureau of
the Ministry of FinanceIntroduction
The Japan Customs of the Ministry of Finance has the following three missions:realizing a safe and secure society; appropriate and fair collection of duties and taxes;
and promoting further facilitation of trade procedures. To accomplish these missions, wehave endeavored to take strict regulatory measures against smuggling, while conducting
customs clearance procedures promptly and smoothly.
On the other hand, gold smuggling occurs frequently, and cases of importconsumption tax evasion totaling large monetary values have been detected recently.
Furthermore, robbery and other crimes related to the gold trade have occurred in Japan.
This situation has now become an enormous social issue. As an authority endeavoring
to accomplish the above three missions, Customs cannot overlook this situation, andshould strictly take on this issue with the utmost urgency.
To address the situation, Emergency Countermeasures to“Stop Gold Smuggling” wasdeveloped to actively and strictly promote the enforcement of relevant laws against gold
smuggling at Customs, which comprise Japan’s border. The endeavor sets the following
three core aims: strengthening inspections; tightening penalties; and enhancing thecollection and analysis of information. In addition, it aims to enhance publicity
activities and strengthen systems. Through these approaches, we will urgently andcomprehensively address the issue of gold smuggling.
We would like you to once again recognize the seriousness of the current situation
surrounding gold smuggling, and understand the needs for strengthening customs
inspections and taking other countermeasures. Please provide us with any available
information on smuggling. Thank you in advance for your cooperation with customs
administration.

November 7, 2017
The Customs and Tariff Bureau of the Ministry of Finance1

Contents
Introduction ...................................................................................................................... 1
Chapter 1 Analysis of the Current Situation and the Need for Countermeasures ........... 3
1-1 Current Situation Regarding Customs ................................................................ 3
1-2 Background of The Emergency Comprehensive Countermeasures ................... 4
1-3 Policies Regarding Countermeasures ................................................................. 8
Chapter 2 Strengthening Inspections―the first aim ....................................................... 9
2-1 Strengthening Passenger Inspections ................................................................. 9
2-2 Introducing Metal Detector Gates .................................................................... 10
2-3 Increasing the Number of X-ray Machines ...................................................... 10
2-4 Countermeasures against Cash Couriers .......................................................... 10
2-5 Strengthening Inspections of Commercial Cargo and International Mail, etc. .11
2-6 Strengthening Inspections of the Inside of Aircraft, Including Private Jets ......11
2-7 Addressing Trading by Sea at Utilizing Customs Boats ...................................11
Chapter 3 Tightening Penalties―the second aim ......................................................... 12
3-1 Strictly Issuing Notifications ............................................................................ 12
3-2 Increasing the Number ofAccusations ............................................................. 12
3-3 Confiscation of Smuggled Gold ....................................................................... 13
3-4 Tightening Penalties ......................................................................................... 13
Chapter 4 Enhancing the collection and analysis of information―the third aim ......... 13
4-1 Collecting Information and Enhancing Cooperation ........................................ 13
4-2 Strengthening Ability of Information Analysis ................................................ 14
4-3 Ensuring Compliance Among Distribution Channels in Japan ........................ 15
Chapter 5 Others ........................................................................................................... 15
5-1 Enhancing Publicity Activities ......................................................................... 15
5-2 Strengthening Systems ..................................................................................... 16
Reference: Cases of Gold Smuggling............................................................................. 17

2

Chapter 1 Analysis of the Current Situation and the Need forCountermeasures
1-1 Current Situation Regarding Customs
While globalization of society and the economy as well as internationalization andsophistication of supply chains progress, Japan Customs is striving to steadily
accomplish its missions of realizing a safe and secure society, appropriate and faircollection of duties and taxes, and promoting further facilitation of trade procedures.
More and more passengers, cargo and mail are flowing into Japan. The number oftravelers visiting Japan from foreign countries in particular has increased rapidly inrecent years, reaching about 24,040,000 people in 2016. Additionally, the number ofport calls by cruise ships hit a record high of 2,017 in 2016 and is expected to further
increase. The government is also aiming to welcome 40 million visitors in 2020 and
60 million visitors in 2030.
On the other hand, Japanese citizens have been the victims of terrorism in foreigncountries such as Syria, Tunisia and Bangladesh, and ISIL and other terrorist
organizations have named Japan as one of their targets. The menace of terrorism has
become a reality. At the same time, Japan is preparing for events that will drive many
people to visit the country, including notable persons from foreign countries such as
those involved in the G20 meeting, TICAD (Tokyo International Conference on African
Development) and the Rugby World Cup in 2019, as well as the Tokyo Olympics andParalympics in 2020; and in preparation for the above, Japan is required to take all
possible measures against terrorism.
The number of cases involving the smuggling of methamphetamines and other illegal
drugs, and of suspensions of imported goods that infringe upon intellectual property
rights remain high. Additionally, the number of gold 1 smuggling cases, which are thetarget of these emergency comprehensive countermeasures, has also increased rapidly.
We need to crack down on increasingly sophisticated and diversified forms of
smuggling at the border effectively and efficiently.
As seen from the above, we are required to take strict regulatory measures against
smuggling while conducting customs clearance procedures promptly and smoothly.

1

In the main text, “gold” includes gold ingot, bullion and other gold products that are
partially processed.
3

(10,000 people)

Figure 1: Travelers visiting Japan from foreign countries
4500
4,000

3700

2900
2,404
1,974

2100
1,341

1300

1,036
733

861

835

835

679

836
622

500
H18
H19
H20
H21
H22
H23
H24
H25
H26
H27
H28
H29
H30
H31
H32
(2006)(2012) 2013(2013) 2014(2014) 2015
(2015) 2016(2016) 2017(2017) 2018(2018) 2019(2019) 2020
(2020)
2006 (2007)
2007 (2008)
2008 (2009)2009 (2010)2010 (2011)
2011 2012

Note: Created based on materials from the Japan National Tourism Organization (JNTO)

Figure 2: Import declarations(10,000cases)
3500
3000
2500
2000
1500
1000
500
0

2006

2011

2016

1-2 Background of the Emergency Comprehensive Countermeasures(Mechanism of Gold smuggling) (Refer to Fig. 3)
Gold smuggling aims to obtain profits equivalent to the amount of chargeable
consumption taxes by importing gold to Japan without declaring them or paying
consumption taxes and selling them to gold purchasing dealers (gold purchasing shops)
in Japan.

4For example, when importing 5 kg of gold with a base price of 5 million yen per
kilogram (25 million yen), you are required to pay consumption tax totaling
2 million yen (25 million yen multiplied by 8 percent) at Customs. A person attempting
smuggling, however, is able to evade the consumption tax, and import the gold to Japan
tax-free. Then, gold purchasing dealers in various towns across Japan purchase thesmuggled gold for prices that include consumption tax(2 million yen), and the person attempting the smuggling obtains a profit equivalent tothe amount of unpaid consumption tax.
It appears that profits obtained by gold smuggling are taken out of Japan andappropriated for purchasing more gold. Such smuggling is considered to be conductedin an organizational manner in most cases.
On the other hand, the gold purchased by gold purchasing dealers will flow into
regular distribution channels, and any excess that exceeds demand in Japan isconsidered to be exported and flows back into international gold markets.
Given the above mechanism for gold smuggling, profits obtained by smuggling may
be used by criminal organizations.
Figure 3: Mechanism of gold smuggling (example)(Detection of gold smuggling, etc.)
Recently, Customs has uncovered many cases of gold smuggling. We have strengthened
control over smuggling, and if it is detected, a thorough investigation is conducted anddealt with strictly. For example, we detected 811 cases of gold smuggling in 2016 and5seized 2.8 tons worth. The number of cases of gold smuggling continues to increase.
From January to September 2017, 976 cases were detected, comprising 4.5 tons, which
already exceeds the total from all of 2016.
After a smuggling case is uncovered, a thorough investigation is conducted, and the
Director-General of the Customs issues a disposition, such as a notification or
accusation. Among 561 duties and taxes evasion cases that received a disposition from
Customs in Japan in JFY 2016 2, 467 cases consisted of gold smuggling. This is 1.6
times larger than that of the previous year, with the total amount of taxation avoided inaggregate reaching a record high of about 870 million yen (1.4 times higher than theprevious year).
Figure 4: The number of disposed cases and total amount of tax evasion generated
from gold smuggling (Between JFY 2012 and 2016)(Evaded taxes:
10,000 yen
100,000(Disposed cases: cases)
500
Evaded taxes
Disposed cases
400

80,000300

60,000200

40,000100

20,0000
Evaded taxes
Disposed cases

2012
2,656
7

2013
3,089
8

2014
23,679177

2015
60,668294

2016
87,361467

0Based on JFYs (from July to June)2

A fiscal year for Japan Customs (JFY) is from July to the end of June of the following
year. For example, JFY 2016 means from July 2016 to June 2017.
6

(Background and Methods of Smuggling)
As the number of documented cases of gold smuggling keeps increasing, it is presumed
that the total number of smuggling incidents is significantly high. There are several
possible contributing factors with regard to this situation: firstly, gold are small andexpensive goods that are easy to conceal 3; persons attempting smuggling consider thatthe penalties for smuggling are insignificant; cashing out with gold purchasing dealersin Japan is comparatively easy; the prices of gold are predictable since international
prices are followed; and prices have remained high in recent years.
Concerning methods to conceal gold, they are very simple in most cases, such as
hiding them somewhere on one’s body or concealing them in one’s belongings.
Recently, however, a number of sophisticated cases have appeared, such as hiding gold
somewhere inside an aircraft or ship, and concealing gold by processing them into
accessories or as parts of some other item.
With regard to the documented methods of gold smuggling, the major form remains
via air passengers. In addition, the number of smuggling cases conducted by cruise shippassengers and using commercial cargo have recently increased. Moreover, smuggling
by crew members and attendants working on airplanes and cruise ships, and smuggling
through trading by sea have also appeared.
Regarding the scale of smuggling, many large-scale smuggling cases have been
uncovered. While conducting a thorough investigation of smuggling cases, Customs
verified the existence of smuggling that was repeatedly carried out not only by
individuals but by organizations as well.
As seen from the above, gold smuggling is presumed to be conductedorganizationally. In addition, the selling of smuggled gold to gold purchasing dealers is
also associated with incidents of robbery of gold bullion and cash acquired from gold
trading, as well as unauthorized cash removals.
(Export and Import of Gold as Seen From Statistics)
We cannot know to what extent gold smuggling is occurring. Still, according to thevolume of exports and imports of gold from Trade Statistics of Japan, the volume ofexports 4 has increased rapidly, from 114 tons in 2014 to 137 tons in 2015 and 197 tons
in 2016. On the other hand, the volume of imports has decreased, from 16 tons in 2014,3

The price of gold has reached as high as around 5 million yen per kilogram, but thesize of gold is as small as 10 cm x 5 cm x 1 cm, which makes it easy to conceal.
4
The volume of exports for gold is set forth as H. S. code 71.08 in the Schedule of the
Customs Tariff Law.
7

to 9 tons in 2015 and 5 tons in 2016. An excess of exports over imports has been
growing at a steep rate: 98 tons in 2014, 128 tons in 2015, and 192 tons in 2016.
On the other hand, according to the Survey of Precious Metals Distribution (General
Statistics), national production 5 of gold was 96 tons, while national consumption 6 was
58 tons in 2016.
Even though we do not have an accurate idea of the amount of gold smuggling taking
place, the above facts indicate the possibility that cases uncovered by Customs represent
just the tip of the iceberg, and a considerable volume of profits is flowing to criminalorganizations who attempt smuggling.
Figure 5: Trading Price 7 of Gold
5,000

Price (yen/gram)

4,500
4,000
3,500
3,000
2,500
2,000

Source: Statistics Monthly, Tokyo Commodity Exchange
1-3 Policies Regarding Countermeasures
As seen from the above, gold smuggling is conducted organizationally in most cases.
Methods of smuggling have become more sophisticated, and forms have become more
5

For the purpose of this document, national production refers to the volume of gold
produced by producers from national mines, foreign mines and scrap.
6
For the purpose of this document, national consumption refers to the volume of gold
and ingots consumed for telecommunications equipment and parts for machines,
dentistry and medication, and jewelry goods.
7
The annual average is calculated from monthly averages of contracted prices of gold
futures (in the immediate delivery month trade) at Tokyo Commodity Exchange.
8

diversified. Customs cannot overlook this situation. Therefore, we decided to takeemergency comprehensive countermeasures against gold smuggling, such as
strengthening inspections and tightening penalties.
Specific measures taken are stated in Chapter 2. Firstly, we will review previous
control measures and conduct thorough inspections at the border to take more strict
regulatory measures against passengers and cargo. To this end, in light of the rapid
increase of passengers and cargo, we will conduct efficient inspections as promptly as
possible by introducing new inspection equipment.
Secondly, we will impose stiffer penalties to confirmed cases of gold smuggling
based on the organizational structure behind the crime and frequency of conduct.
Specifically, we will conduct thorough investigations of criminal cases with the aim offull disclosure, and seek indictments in those cases deemed to be particularly
reprehensible, seeking severe criminal punishment for such cases, including
imprisonment and confiscation of assets. Under the current system, fines for gold
smuggling are prescribed at not more than 10 million yen 8. We will discuss raising the
maximum amount of the fines to instill heavier economic disadvantages on gold
smugglers and to raise the deterrent effects of the penalties.
Thirdly, to prevent gold smuggling, we will strengthen the ability to analyze thePassenger Name Record (PNR) and other information obtained by Customs, andconcurrently, further cooperate with relevant agencies.
In addition, we will enhance publicity activities and establish systems needed for theabove measures.
Customs will endeavor to promptly implement these measures to eliminate gold
smuggling.

Chapter 2 Strengthening Inspections―the first aim
2-1 Strengthening Passenger Inspections
Customs analyzes various types of information, and then selects passengers under ahigh risk of gold smuggling in advance, makes inquiries to said passengers and inspects
their baggage when necessary. Despite these measures however, gold smuggling bypassengers continues to be a problem, and therefore, there is a need to take stricter
regulatory measures against passengers who pose a risk of smuggling.

8

Under the Consumption Tax Act, if the amount of tax avoidance exceeds 10 million
yen, a fine of up to the amount of unpaid tax may be posed according to thecircumstances.
9

As seen from past cases, a diverse range of passengers and crew members have been
involved in gold smuggling as “couriers” on various routes employing airplanes andcruise ships.
For these reasons, we need to strengthen passenger inspections by conducting strict
and thorough inspections in a flexible and bold manner at all times, day and night.
Firstly, we will ensure that all passengers are checked for whether or not they possessgold, and then strengthen the ensuing inspections. If gold without declaration isdetected, we will strictly deal with the situation. Strengthening inspections includes
installing inspection equipment such as metal detector gates and X-ray Machines, andconducting stricter body searches.
2-2 Introducing Metal Detector Gates
At the customs inspection upon entry,
Customs has already conducted passenger
inspections using mobile metal detectors. We
will introduce metal detector gates at customs
inspection areas to conduct inspections of allpassengers and efficient body searches. We
aim to introduce the gates on a nationwide
basis as soon as possible. To start with, thegates will be installed at airports and otherFigure 6: Image of a metal detector gate
locations with many inbound passengers. Thisapproach enables us to take stricter regulatory measures against more passengers than
before while performing customs clearance procedures promptly and smoothly.
2-3 Increasing the Number of X-ray Machines
To deal with a smuggling method consisting of hiding gold in a suitcase altered to aid inconcealing various items, Customs has been conducting inspections using X-ray
machines. In order to conduct a strict inspection to detect gold smuggling, in the future
we need to establish an X-ray inspection system that enables us to conduct inspections
on every passenger. We will take more efficient and effective regulatory measures thanever before by actively increasing the number of X-ray machines in use.
2-4 Countermeasures against Cash CouriersGold smuggling appears to be perpetrated in a repeated cycle consisting of illegally
taking out cash obtained by selling gold and ingots and purchasing additional gold withit.
10

Customs has been taking countermeasures against such “cash couriers,” who illegallytake large amounts of cash out of the country via concealment on their body or in theirbelongings. We will strive to strengthen the departure control system through further
cooperation with relevant agencies. If someone attempts to take out a large amount ofcash, etc. from Japan by hiding it in his/her belongings, we will take strict regulatory
measures against the perpetrator, treating him/her as an offender of the Customs Law.
We will enhance the effects of countermeasures against gold smuggling throughstrengthening control over such cash removals.
2-5 Strengthening Inspections of Commercial Cargo and International Mail,etc.
In most gold smuggling cases involving air passengers, gold are hidden somewhere on
their person or in their belongings; however, some are hidden in commercial cargo.
Instances of smuggling using commercial cargo (air cargo and marine cargo) andinternational mail may increase in the future.
For air cargo in particular, we must take note that the number of cargo exports andimports that are basically transported by door-to-door delivery, such as international
express service and international delivery service, (namely, small package [SP] cargo) is
increasing.
While taking on such logistical changes, we will conduct strict examinations based on
analysis results from past detected cases. Concurrently, we will endeavor to prevent
gold smuggling by implementing measures including checking cargo weight andconducting thorough inspections using X-ray inspection equipment, regardless of themeans of transportation used.
2-6 Strengthening Inspections of the Inside of Aircraft, Including Private Jets
Many cases of smuggling involving hiding gold in aircraft have been detected.
Therefore, we will strengthen inspections of the inside of aircraft in cooperation withairline companies to identify which locations may be used for smuggling, and willconduct strict and efficient inspections of the inside of aircraft using inspection
equipment.
2-7 Addressing Trading by Sea at Utilizing Customs Boats
We will utilize customs boats to crack down on the smuggling of methamphetamines
traded at sea or on isolated islands, as well as for surveillance activities against gold
trading at sea. We will endeavor to strengthen control over the ocean and isolatedislands in cooperation with the Japan Coast Guard and other relevant agencies.
11

Chapter 3 Tightening Penalties―the second aim
3-1 Strictly Issuing Notifications
With regard to gold smuggling detected by Customs, the suspect will be required toappear at Customs to answer inquiries; or an investigation, such as search and seizure,
will be conducted under a permit issued by a judge when necessary. After theinvestigation, the Director-General of the Customs will issue a notification as anadministrative penalty (notifying the suspect to pay an amount equivalent to a fine to
Customs), and if the case warrants a prison term, the director will make a formal
accusation to a prosecutor to seek criminal prosecution.
In light of imposing heavier economic disadvantages on gold smuggling and further
enhancing the deterrent effect of the disposition, a notification will be issued not only to“couriers,” but also to related persons behind the couriers after conducting a thoroughinvestigation and fully disclosing the case.
3-2 Increasing the Number of Accusations
To eliminate gold smuggling, full disclosure of a case through a thorough investigationand stiff punishments administered following a criminal procedure are effective. For
this reason, Customs has been cooperating with prefectural police departments, thePublic Prosecutors Office, the Japan Coast Guard and other relevant agencies with theaim of making formal accusations to prosecutors. In previous cases brought toprosecutors as a result of an investigation in cooperation with the relevant agencies,
offenders in criminal proceedings have been sentenced to penalties that restrict one’s
freedom, including imprisonment. It is important for us to actively promote thoroughjoint investigations, including detention, with relevant agencies and increase the numberof accusations made.
Results of research on gold smuggling suggest that activity areas of persons
attempting to smuggle are expanding, and that role-sharing by offenders, in which roles
are allocated, e.g., the roles of collector and seller of smuggled gold, and the role oftaking out cash from Japan after the sale, is also advancing. To take on such expansionof activity areas and the advancement of role sharing, a special division that conducts
cross-customs investigations of gold smuggling (provisional name: Special
Investigation Team) will be organized by Tokyo Customs, Osaka Customs and Moji
Customs.

12

3-3 Confiscation of Smuggled Gold
Gold smuggling is strictly punished, and smuggled gold are subject to confiscation
under the provisions of the Penal Code as an object comprising a component of acriminal act. For example, in the case where 65 kg of gold were smuggled by several
passengers on an airplane from South Korea and the case where 1 kg of gold were
smuggled by a passenger on an airplane from Hong Kong, confiscation was applied
regardless of the volume of smuggled gold. Customs will enter gold smuggling into
criminal procedures by actively accusing perpetrators and enhancing application of theconfiscation of gold through criminal procedures.
3-4 Tightening Penalties
Gold smuggling violates three laws: the Consumption Tax Act (evasion of consumptiontax), the Local Tax Act (evasion of local consumption tax) and the Customs Law(unauthorized export and import). The current statutory penalty is prescribed as
imprisonment for not more than 10 years and a fine of not more than
10 million yen (up to the amount of the unpaid tax if the amount exceeds 10 million
yen) for a violation of the Consumption Tax Act and the Local Tax Act, andimprisonment for not more than 5 years and a fine of not more than 5 million yen forviolation of the Customs Law.
In light of posing heavier economic disadvantages on gold and ingot smugglers andfurther enhancing deterrent effects against gold and ingot smuggling, discussions ontightening penalties will be promptly promoted.

Chapter 4 Enhancing the collection and analysis of
information―the third aim
4-1 Collecting Information and Enhancing Cooperation
Smuggling routes continue to expand. To deal with this, Customs will endeavor to
uncover more gold smuggling cases and clarify the overall picture of organized
smuggling by enhancing information collection from related persons, and informationexchange between relevant regulatory agencies in and outside of Japan (foreign
Customs, National Tax Agency, police, Japan Coast Guard and Immigration Bureau).
Collecting Information from Related Persons
The Japan Customs of the Ministry of Finance has established a Smuggling Hotline(0120-461-961) to collect information on smuggling from related persons and citizens.
We will collect additional information from related persons that is useful for thedetection of gold smuggling. Please proactively inform Customs about anything
pertaining to gold smuggling. The information provided will be used by Customs to13

prevent smuggling, while maintaining high confidentiality with regard to information
bearers.
Customs Authorities of Foreign Countries
To promote information exchange between Customs authorities of foreign countries,
the Customs and Tariff Bureau of the Ministry of Finance has actively entered into
international agreements, including the Customs Mutual Assistance Agreement, which
is a framework for international cooperation between Customs authorities. For theprevention of gold smuggling, we will continue to conduct information exchanges
between Customs authorities of foreign countries under the Customs Mutual AssistanceAgreement and other agreements, and make use of opportunities at relevantinternational conventions to encourage active information provision from such
authorities.
National Tax Agency
To realize appropriate and fair imposition of taxes pertaining to gold, Japan Customs,
under the Customs and Tariff Bureau of the Ministry of Finance, will cooperate with the
National Tax Agency and exchange information required to impose taxes.
The Police and the Japan Coast Guard
To uncover a larger number of gold smuggling cases, and to clarify the overall pictureof organized smuggling, we need to promote information exchange on the current
situation regarding gold smuggling and on those who attempt to smuggle. For thisreason, we will establish a framework for cooperation between relevant agencies, andstrengthen information collection and cooperation by sharing information on the current
situation regarding gold smuggling cases and exchanging information on individual
crimes.
The Immigration Bureau
To strictly prevent gold smuggling at the border, Japan Customs, under the Customs
and Tariff Bureau of the Ministry of Finance, will exchange information with the
Immigration Bureau and further cooperate with regard to conducting examinations andinspections on inbound passengers at the border.
4-2 Strengthening Ability of Information Analysis
As part of the arrival procedures under the Customs Law, airplanes involved in foreign
trading that arrive at any Customs airport in Japan are required to report their Passenger
Name Record (PNR) and Advance Passenger Information (API) to Customs. Customs
utilizes such advance information and conducts appropriate analysis and advanceselection of inbound air passengers in light of gold smuggling to conduct effective andefficient control at the border. At the same time, we will conduct an intensive selection14

of sea passengers in the future to strengthen the selection system and further enhance
analyzing ability.
Furthermore, we will analyze relevant information obtained from relevant agencies
and information obtained through regulatory measures to clarify the overall picture oforganized smuggling and increase the number of detected cases of gold smuggling.
4-3 Ensuring Compliance among Distribution Channels in JapanTo eliminate evasion of consumption taxes through gold smuggling and prevent robbery
involving cash and gold bullion that is related to smuggling, it is extremely important
for Customs to strengthen control over the border and prevent smuggled gold frombeing easily sold in Japan and distributed in the market.
Business operators who engage in the distribution of gold are obliged as specificbusiness operators under the Criminal Proceeds Transfer Prevention Act 9 to confirm aseller’s identity and maintain records of transactions when purchasing gold, and toreport suspicious transactions to administration. They are currently endeavoring tofulfill their obligation. Pledging never to be involved in dealing in smuggled gold, thebusiness operators are expected to take voluntary measures to ensure compliance 10, suchas strictly verifying the origin of gold when purchasing them.
To prevent gold smuggling, we need to clarify the distribution routes of smuggled
gold in Japan.
To understand the precise picture of smuggling, Customs will look at the distributionof gold starting from the declaration of export and import, will collect information on
the distribution route of gold by interviewing trading companies, and will cooperatewith the Ministry of Economy, Trade and Industry 11.

Chapter 5 Others
5-1 Enhancing Publicity Activities
Not only residents in Japan, but also a diverse range of passengers, including residents
in foreign countries with no domicile in Japan, are involved in gold smuggling as“couriers” to obtain money and other benefits. We will enhance publicity activities by
delivering a message in multiple languages that gold smuggling is a crime and may be

9Act on Prevention of Transfer of Criminal Proceeds (Act No. 22 of 2007)
Under the Customs Law, the act of obtaining smuggled goods free of charge or forcompensation is subject to penal provisions.
11
The Agency for Natural Resources and Energy of the Ministry of Economy, Tradeand Industry is the competent agency under the current Criminal Proceeds Transfer
Prevention Act for the distribution of gold in Japan.
1015

punished strictly, in order to prevent citizens, whether residing in Japan or not, frombecoming “couriers.”
5-2 Strengthening Systems
To actively promote the specific measures against gold smuggling that have been statedstarting from Chapter 2, the systems employed by Customs must be strengthened. To
this end, we will establish and enhance systems as follows to strengthen control overgold smuggling at the border and tighten penalties.
Firstly, we will establish a regulatory strategy group at each regional Customs tosteadily implement measures. A task force will also be newly established in the Customs
and Tariff Bureau of the Ministry of Finance to play a role as a director ofcountermeasures against gold smuggling, and provide direction to and coordinate with
regional Customs.
Secondly, as stated in 3-2 of Chapter 3, to clarify the overall picture of smuggling,which is expanding in area and dividing the roles of those involved, a special division
for conducting cross-customs investigations of gold smuggling (provisional name:Special Investigation Team) will be newly organized.
Thirdly, in a JFY 2018 staff request, we requested an increase in the number of staff
who conduct passenger inspections at airports and other locations, examinations andinspections of cargo, and investigations of criminal cases. Also, in a budget request, werequested funds needed to introduce metal detector gates and X-ray machines alongwith other inspection equipment.

16

Reference: Cases of Gold Smuggling17

Large-scale and organized crime with the involvement of organized crime group members
In December 2015, about 112 kg of gold hidden in four suitcases that were not declared
were detected from the cargo compartment of a private jet that arrived at Naha Airport
from Macau. After an investigation, seven Japanese males, including organized crimegroup members, who attempted to evade paying consumption tax totaling about 38
million yen, were accused of violating the Customs Law, etc.
This case involved large-scale organized crime conducted by several organized crimegroup members and a private jet operating company.
The method of smuggling was as follows: The perpetrators loaded gold hidden infour suitcases into the cargo compartment of a private jet and flew to Japan from aforeign country but did not make any customs declaration. They attempted to smuggle
the gold by using the jet as a domestic line aircraft and departing for another airport, andthen unloading the gold at the arrival airport, from which they tried to carry them out.
In the judgment, A, a senior member of an organized crime group, who acted as themain offender, was sentenced to two and half years in prison and a fine of 5 million yen,while the other accomplices were also sentenced to prison terms and fines. The gold
they attempted to smuggle were confiscated.
This smuggling organization was found out to have smuggled gold on over 40 occasions
in total using the same method and using baggage brought
into civil airplanes, with at least 3,000 kg (equivalent to 14
billion yen) of gold sold in Japan.

[Judgments]
A, an organized crime group senior member and the main offender: a prison term of two and halfyears, a fine of 5 million yen and confiscation of 112 kg of gold (appealed)B, an organized crime group member and a courier: a prison term of two years (suspended for
four years) [became final]
C, a relevant person in the organized crime group and a courier: a prison term of one and halfyears (appealed)D, a representative director of the private jet operating company: a prison term of one and halfyears and a fine of 2 million yen (appealed)
E, an employee of the company: a prison term of one and half years (suspended for three years)[became final]F, the pilot of the private jet: a prison term of one year and a fine of 1 million yen (suspended forthree years) [became final]G, the copilot of the private jet: a prison term of eight months (suspended for three years) [became final]18

Large-scale organized crime conducted by sea
In May 2017, around 206 kg of gold traded by sea and landed on a fishing port in Saga
Prefecture from a fishing boat were detected. After an investigation, seven Japanesemales and three Chinese males, who attempted to evade paying consumption tax
totaling about 74 million yen, were accused of violation of the Customs Law, etc.
This case involved large-scale organized crime conducted under careful planning byrelated persons in and outside of Japan.
The method of smuggling was as follows: A and four other persons shipped around
206 kg of gold from a ship of unknown nationality to a fishing boat owned by A on the
open ocean in the East China Sea. They smuggled the gold by landing them on a fishingport in Saga Prefecture, with F and three other persons waiting with a vehicle to takeover transport in Japan.
After a thorough investigation of the criminal case in cooperation with a relevant
agency, I and J, who did not participate in the actual criminal act but were the main
offenders, were also arrested; and therefore, ten persons were accused in total.
<Image>
A-E

Boarding
Transshipping

Fishing ship
owned by A
Iki Island

Ship of unknown
nationality

Landing
A-E

On the open ocean
in the East China Sea
F-HFishing port in Saga Prefecture19

Crime conducted without thinking by a woman to earn pocket money
In December 2016, in customs inspections on a Japanese female and four South Korean
females who arrived at Chubu International Airport from South Korea, about 30 kg ofgold hidden in the underclothes of three females were detected. After an investigation,
the five females involved, who attempted to evade paying consumption tax totaling
about 10 million yen, were accused of violation of the Customs Law, etc.
This case was a crime conducted without careful consideration by a group of females,
who live in Japan and who know each other, in order to earn pocket money.
The method of smuggling was as follows: A contacted X, a related person living inSouth Korea, and coordinated the crime. A traveled to South Korea with four
acquaintances who were solicited as couriers nominally to earn pocket money. Each ofthem received gold from X and hid them in their underclothes, which had been modified
to allow for concealment of the items in question, and then attempted to smuggle thegold by wearing said underclothes.
A and others stated that they had repeatedly engaged in smuggling using the same
method and received compensation starting from a few years ago, which strongly
suggests that their crime was habitual.

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Organized crime conducted through detailed role sharing
In September 2015, in customs inspections on four pairs each of Japanese males andfemales who arrived at Narita International Airport from South Korea, about 33 kg ofgold hidden in kimchi containers placed in duty-free bags were detected. After aninvestigation, the eight males and females along with another ten Japanese males andfemales, amounting to 18 males and females, and a corporation, who attempted to evadeconsumption tax totaling about 12 million yen, were accused of violation of the
Customs Law, etc.
This case involved organized crime with the participation of many persons in andoutside of a smuggling group, and was conducted through detailed role sharing.
The method of smuggling was as follows: A, the main offender, acted as a director toprovide directions on a route and method for smuggling, and divided the roles of
persons in and outside of the smuggling group in detail, such as procuring funds forpurchasing gold, purchasing gold, procuring “couriers,” collecting gold after smuggling,targeting where to purchase and sell the gold, and selling the smuggled gold. The eight
Japanese males and females were gathered through SNS or by the word of mouth offriends, stating, “You can travel to South Korea for free and even receive
compensation.” A attempted to have these eight males and females smuggle gold.
From past sales results to gold purchasing dealers, it was revealed that the group hadsold gold equivalent to at least 2.5 billion yen, which strongly suggests that it had
illicitly obtained profits of about 200 million yen through the smuggling.
<Image>21

Crime that may involve illegal removal of a large amount of cash
In April 2017, a large amount of cash hidden in the carry bags of four South Koreanmales who tried to depart from Fukuoka Airport to Hong Kong was detected. The cash
had not been declared and was going to be illegally taken out of the country without
permission of the Director-General of Customs. After an investigation, the four South
Korean males were found to have been also involved in a smuggling case involving
about 6 kg of gold detected in the same airport just one week prior, and they were
therefore accused of violating the Customs Law, etc. in both cases. Another South
Korean male was also accused for his role in actually conducting the criminal act ofgold smuggling.
The offenders of this case denied all charges and remain silent. They refuse to talkabout the source of the large amount of cash that they attempted to take out illegally.
They also deny their involvement in smuggling the gold. Details of the two cases,
therefore, have not been revealed.
Despite the above, however, evidence pertaining to the case, such as the situation
regarding departure and immigration, mails, and sales receipts to gold purchasing
dealers, strongly indicates that they had conducted a series of acts (smuggling of gold,
selling them, and taking out a large amount of cash from Japan after selling them) in an
organized and repeated manner.
<Image>South Korea

Hong Kong

Provides directions andmonitors

Not authorized
Evadesconsumption
taxes
Japan
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Careless crime conducted by a public official who lacks the spirit of compliance
In March 2017, in customs inspection on a Japanese male who arrived at Fukuoka
Airport from South Korea, 3 kg of gold hidden under both feet and between the legs
using tape were detected. After an investigation, the male, who attempted to evade
paying consumption tax totaling about 1 million yen, was accused of violating theCustoms Law, etc.
The offender in this case was a public officer, who is obliged to comply with laws
and regulations. He committed this crime carelessly, lacking the spirit of compliance, by
easily assuming the role of a “courier” in order to receive compensation.

[Judgment]
A prison term of one year (suspended for three years) (appealed)

Reprehensible crime conducted by a recidivist with no normative consciousness
In January 2015, in a customs inspection on a Japanese male who arrived at KansaiInternational Airport from Hong Kong, about 1 kg of gold hidden in a carry bag weredetected. After an investigation, the male, who attempted to evade paying consumption
tax totaling about 400,000 yen, was accused of violating the Customs Law, etc.
The offender in this case had a criminal record (several prior criminal charges citing
various offences). Because he felt the export declaration procedure was troublesome, hecommitted the crime, and did so within three years of being released from prison for aprevious offence. This case, therefore, was held to be a reprehensible crime conductedwith no normative consciousness. The offender was sentenced to eight months in prison
without suspension, and the gold he attempted to smuggle were confiscated.

[Judgment]
A prison term of eight months and confiscation of one ingot [became final]

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