Nick Conklin is a New York City police officer facing possible criminal charges; Internal Affairs believes Nick was involved with his partner who was caught taking criminal money in a corruption scandal. Nick is divorced from his wife, who has custody of their two children. Nick also has financial difficulties.
At a restaurant, Nick and his partner Charlie Vincent observe two Japanese men meet with Mafia gangsters. Nick's suspicions are validated when another Japanese man enters the restaurant, seizes a small package at gunpoint, kills two people, and leaves. Nick and Charlie chase and arrest the suspect after he nearly kills Nick. The suspect, a Yakuza gangster named Sato, is to be extradited to Osaka and given to the police there. Though angered Sato will not be prosecuted in the US, Nick agrees to escort him. Nickâs captain believes it will keep Nick from causing more trouble and exacerbating the already biased Internal Affairs investigation.
When they arrive in Osaka, they surrender Sato to the Japanese police, only to be told that they were duped by impostors. Nick convinces the Osaka police to allow them to observe the investigation, though their weapons are confiscated. They are assigned to Masahiro Matsumoto. Nick behaves rudely and offends Matsumoto, while Charlie attempts to be more polite. Nick also makes contact with an American nightclub hostess, Joyce, who explains that Nick and Charlie represent American inefficiency and stupidity to the Japanese. Through her, Nick discovers Sato is fighting a gang war with a notorious crime boss, Sugai, and traveled to New York to disrupt Sugai's counterfeiting scheme.
Nick joins a police raid without permission and takes a few $100 bills from the crime scene. The next day, Matsumoto explains they have dishonored themselves, him, and the police force by his theft, which has been reported in America; Nick calls him a snitch and demonstrates the money is counterfeit by burning one of the bills. At night, Nick and Charlie walk back to their hotel drunk and unescorted, despite warnings about their safety. In an apparent prank, a young motorcyclist steals Charlie's coat and leads him to an underground parking garage. Separated from Charlie, Nick watches in horror as Sato and several others briefly torture and kill him. Joyce comforts the distraught Nick at her apartment. Later, Mastumoto hands him Charlie's service pistol.
As Matsumoto and Nick trail one of Sato's operatives, Nick admits he stole money in New York. The operative retrieves a sample counterfeit note, which she passes to a gangster. Nick and Matsumoto tail him to a steel foundry, where they find Sato is meeting Sugai, and the package from New York is a printing plate for American $100 bills. Nick confronts Sato, who escapes when swarming police arrest Nick for waving a gun in public. Though deported, Nick sneaks off the plane to pursue Sato on his own, as Matsumoto has been suspended and demoted. Joyce helps him meet Sugai, who explains that making counterfeit US currency is his revenge for the "black rain", or nuclear fallout, after the bombing of Hiroshima in World War II. Nick suggests a deal where Sugai can use Nick to retrieve the stolen plate from Sato, leaving Sugai's reputation and hands clean.
Sugai drops Nick at a remote farm with a shotgun. Matsumoto arrives, and they deduce Sato plans a massacre. During a meeting with Sugai, Sato cuts off one of his fingers in atonement, stabs Sugai, and escapes with the plates, prompting a gunfight between Sugai's and Sato's men. Sato escapes the fight on a dirt bike, Nick pursues, and the two fight briefly. Nick gains the advantage and, having Sato at his mercy, has the choice of whether or not to kill Sato for Charlie and all the humiliation he has suffered. Matsumoto and Nick walk a handcuffed Sato into police headquarters to the amazement of everyone and later receive commendations, which Nick accepts gratefully. Before boarding his flight home, Nick thanks Matsumoto for his assistance and friendship, and gives him a dress shirt in a gift box. Underneath it, Matsumoto finds the counterfeit printing plates.

Question: Why does Nick get arrested?
Answer: For waving a gun in public.