SAKURA Law Office | Legal Update by Managing Partner Kenshiro Michishita
October 5, 2026
SAKURA Law Office | Kenshiro Michishita, Managing Partner
SAKURA Law Office has published the twenty-second edition of the Legal Update series by Managing Partner Kenshiro Michishita, “Regulatory Inspections and Dawn Raids in Japan — JFTC, FSA and PPC Investigations, Criminal Search and Seizure, Digital Evidence and Internal Investigations (2026).”
An unannounced visit by a regulator or law-enforcement authority is not simply a faster version of an ordinary compliance inquiry. A Japan Fair Trade Commission administrative inspection under the Antimonopoly Act, supervisory action by the Financial Services Agency or a Local Finance Bureau, an inspection by the Personal Information Protection Commission, and a criminal search and seizure by police or prosecutors may all involve officials arriving at a company and requesting documents or data. The legal basis, degree of compulsion, treatment of employee interviews, role of counsel, available objections and consequences of non-compliance are nevertheless materially different.
The first-response objective should not be reduced to “cooperate” or “resist.” The company should identify the authority, statutory power and precise scope of the process; avoid obstructing lawful action; centralize communications; and create its own contemporaneous record of what is reviewed, produced, copied or removed. External counsel, IT, senior management and the relevant audit or supervisory body should be activated at the same time, while automatic deletion and other processes that could destroy relevant evidence are suspended.
Digital evidence makes the 2026 environment particularly important. Amendments to the Code of Criminal Procedure effective May 21, 2026 introduced a compulsory electronic-record production order and related mechanisms. Corporate data may now be dispersed among cloud services, SaaS applications, messaging platforms, mobile devices, access logs and overseas data regions. In the financial sector, the FSA’s principal supervisory guidelines were also updated for application from October 1, 2026, continuing the shift toward integrated on-site and off-site monitoring rather than viewing an inspection as a stand-alone event.
This Legal Update explains, as of October 5, 2026, how Japanese companies, Japanese subsidiaries of foreign groups, overseas General Counsel and foreign counsel should connect the first minutes of a JFTC, FSA, PPC or law-enforcement intervention with evidence preservation, internal investigation, employee representation, cross-border data governance, board oversight, market disclosure, crisis communications and remediation.
Executive Summary
The threshold question is the legal power being exercised, not the label attached to the visit. A JFTC administrative investigation under Article 47 of the Antimonopoly Act carries indirect compulsory force backed by sanctions but is not a criminal investigation. FSA inspections form part of continuous supervisory monitoring under sector-specific statutes and supervisory guidelines. The PPC may require reports and materials and conduct on-site inspections under Article 146 of the Act on the Protection of Personal Information. Police and prosecutors, by contrast, generally rely on judicial warrants for compulsory search, seizure and related criminal investigative measures.
In the first minutes, reception and business personnel should not improvise substantive explanations or production decisions. The company should verify identification and written authority, centralize the response channel, record what officials review or take, and activate legal, IT, management and audit functions. Counsel should be called immediately, but the company should not assume that officials must wait for counsel before commencing a lawful inspection or search.
For JFTC matters, the on-site response must be linked to interview strategy, the leniency and investigation-cooperation regimes, the commitment procedure, possible procedural objections and the internal investigation. Japan does not apply a single U.S.-style attorney-client privilege across all administrative and criminal processes. The JFTC Determination Procedure offers limited protection for qualifying confidential communications with independent counsel relating to suspected conduct eligible for the surcharge leniency system; it should not be generalized into a blanket privilege.
FSA and PPC matters are often assessed against the company’s prior regulatory record. What was said in earlier supervisory meetings, breach reports, remediation plans and board materials may be compared with what officials find on site. The PPC reported 148 on-site inspections of private-sector personal-information handlers and related entities in FY2025, demonstrating that these powers are actively used. Consistency over time matters as much as the first-day explanation.
Criminal search and seizure now require a data architecture response as well as a physical-premises response. Since May 21, 2026, Article 218 of the Code of Criminal Procedure permits a court-authorized electronic-record production order, and related provisions can include non-disclosure obligations in specified circumstances. Companies should understand data locations, access rights and cloud architecture before an incident occurs and should avoid changing the evidence environment after a search begins.
1. The First Thirty Minutes: Determine the Legal Power, Scope and Corporate Command Structure
The company’s first task is not to explain the merits. It is to identify the legal process and establish who is authorized to speak for the company. The same English shorthand — “inspection,” “raid” or “on-site visit” — can conceal very different Japanese procedures. Reception staff should verify the agency, officials and identification and immediately escalate any warrant, written order, notice or JFTC inspection document to the designated legal or compliance lead and outside counsel.
The written instrument should be read for its statutory basis, matter or suspected conduct, premises, time period, categories of property or data, and any validity period. The company should avoid argumentative confrontation at reception, but it should also avoid unstructured explanations by personnel who do not know the legal scope of the process. A single company response channel should be established, with separate personnel assigned to accompany officials, create a contemporaneous chronology and coordinate IT and management decisions.
External counsel should be contacted immediately, but a workable Japanese dawn-raid protocol cannot depend on counsel arriving before anything happens. The JFTC’s administrative investigation guidelines state that attorney attendance during an on-site inspection may be permitted at the company’s request to the extent it does not interfere with the inspection, but officials are not required to postpone the start until counsel arrives. A company likewise cannot unilaterally suspend lawful execution of a criminal warrant.
Cooperation does not mean losing control of the company’s own record. Without obstructing the authority, the response team should track the rooms and systems accessed, materials requested, data copied, items removed, questions asked and answers given. That record will later support the internal investigation, regulator submissions, employee advice, disclosure decisions and any procedural challenge or remediation plan.
2. JFTC Investigations: Run the Inspection, Interview, Leniency and Resolution Strategy as One Matter
Article 47 of the Antimonopoly Act gives the JFTC administrative investigative powers including orders to report or produce materials, appearance and formal examination, and on-site inspection. Compliance is backed by statutory sanctions, which is why the procedure should not be treated as an ordinary voluntary request. At the same time, the Antimonopoly Act expressly distinguishes these administrative powers from criminal investigative authority. The response should identify which steps are Article 47 measures and which are requests for voluntary cooperation.
During an inspection, contracts, pricing materials, meeting records, sales documents, email, messaging data, accounting systems and devices may all become relevant. The company should create a same-day chronology identifying JFTC personnel, company responders, affected business units, custodians, data sources and materials produced or retained. This is also important because the JFTC framework provides short periods for objections to specified Article 47 measures and complaints concerning conduct during voluntary interviews.
JFTC interviews and corporate interviews should not be treated as interchangeable fact-gathering sessions. JFTC procedures distinguish voluntary interviews from formal examination under Article 47, and the guidelines impose specific practices regarding attendance, recording and note-taking. A company that conducts intensive pre-interviews of employees immediately before JFTC questioning can create concerns about coordinated accounts and can blur conflicts between the corporation and individuals. Preservation and documentary review should generally precede witness sequencing.
Privilege analysis is equally Japan-specific. Japan does not provide a unitary corporate attorney-client privilege that automatically immunizes all lawyer communications from administrative collection. The JFTC Determination Procedure applies only to qualifying objects recording confidential communications between an enterprise and independent counsel concerning legal advice on suspected conduct eligible for the surcharge leniency system, subject to detailed conditions. A “Privileged” label added after officials arrive does not create the statutory protection.
If cartel or bid-rigging risk emerges, the leniency and investigation-cooperation frameworks may require immediate assessment before the company has completed a full internal investigation. The JFTC reported 182 fact reports and related submissions under the leniency system in FY2025. Commitment procedures are a different route and exclude specified hardcore conduct such as certain price cartels, bid rigging and coordinated bidding. Investigation defense, leniency, commitments and remediation should therefore be designed together rather than pursued as unrelated workstreams.
3. FSA and PPC Matters: Regulatory History and Remediation Are Part of the Inspection Record
An FSA or Local Finance Bureau inspection should be understood in the context of continuous supervision. The FSA’s supervisory guidelines, including versions effective from October 1, 2026, describe an integrated approach in which on-site inspections are combined with off-site analysis, interviews, data and ongoing dialogue. For a bank, securities firm or other regulated financial institution, the inspection is therefore rarely day one of the regulatory relationship.
Prior submissions, earlier supervisory discussions, unresolved findings, remediation plans and management awareness can be as important as the answers given during an on-site visit. If practice on the ground differs from what the institution previously represented to the authority, the institution should establish the chronology, cause, customer impact, management escalation and verification of remediation rather than rely on a verbal assertion that the issue has now been fixed.
The PPC has a different statutory mandate. Article 146 of the APPI authorizes it, within the necessary scope of enforcement, to request reports and materials and to enter relevant premises, ask questions and inspect books, documents and other items; the statute also states that those powers are not criminal investigative powers. The PPC’s FY2025 Annual Report records 148 on-site inspections of personal-information handlers and related private-sector entities, alongside guidance, recommendations and an order.
Where the PPC matter follows a data breach or cyber incident, the company’s inspection response should be reconciled with earlier breach reports, notifications to affected individuals, root-cause conclusions and remediation statements. An initial report can properly identify unresolved facts as unresolved. The problem arises when later evidence is forced to fit an earlier narrative. Regulatory credibility is strengthened when the company can show what it knew at each stage, what it investigated and how it updated its conclusions.
4. Criminal Search and Seizure: Read the Warrant and Control the Digital-Evidence Response
Criminal search and seizure is not simply a more severe administrative inspection. Article 218 of the Code of Criminal Procedure provides that prosecutors, prosecution officers and judicial police officials may, where necessary for an investigation, conduct seizure, search, an electronic-record production order or inspection under a judicial warrant. The company should review the suspected offense, property or electronic records identified, search location, production method and validity period, while avoiding obstruction of lawful execution.
Amendments effective May 21, 2026 are particularly important for corporate data. An electronic-record production order specifies the records and method of production. In defined circumstances, the court may also authorize an order prohibiting the recipient for up to one year from indiscriminately disclosing the existence of the production order or whether the records were provided; statutory penalties can apply to violation. A company or service provider receiving such an order should not assume that ordinary escalation to every affiliate or overseas headquarters is automatically permissible.
Article 218 also addresses copying data from specified recording media connected to a computer being seized. In modern enterprises, the practical questions can include cloud environments, overseas regions, SaaS applications, employee devices and outsourced systems. IT personnel should be able to explain system architecture and access rights, but should not alter accounts, retention settings or data locations after execution begins. Questions of territorial scope, overseas data and third-party rights require case-specific analysis rather than ad hoc technical decisions.
Lawyer communications require precision here as well. Article 105 of the Code of Criminal Procedure gives attorneys and certain other professionals a right, subject to exceptions, to refuse seizure of entrusted items containing another person’s confidential information, and Article 105-2 extends the framework to specified electronic-record production orders. This is not the same as a blanket corporate privilege over every email exchanged with counsel or retained by the client itself.
Finally, the corporation and individual officers or employees may not have aligned interests. If an individual faces personal criminal or administrative exposure, separate representation may be necessary. Company-wide instructions should focus on preservation, the authorized authority-contact channel and restrictions on external communications, while making clear that employees must not compare or harmonize factual accounts.
5. Coordinate the Internal Investigation with the Authority Process — Do Not Contaminate the Evidence
A company under investigation still needs to understand what happened. It may need to make decisions concerning administrative or criminal exposure, director duties, customers, M&A indemnities, insurance, disclosure and remediation. The internal investigation therefore cannot simply stop because an external authority is active. The sequencing, however, must be disciplined.
Objective evidence should be preserved first. Relevant auto-deletion of email and messages, log rotation, device reimaging, departing-employee account deletion and backup overwriting should be suspended. Data sources, custodians, relevant periods and access rights should be mapped. Vague instructions to “clean up files” or “organize email” should be avoided because they can prompt deletion, movement or alteration of potentially relevant information.
Employee interviews should be designed after a sufficient documentary record has been assembled. Counsel should consider whether an employee is about to be interviewed by the authority, whether separate counsel is needed and whether any internal interview could be characterized as coaching or coordination. The objective is a record that can withstand external scrutiny, not a corporate narrative optimized for the next regulator meeting.
Cross-border groups face an additional governance problem. A Japanese subsidiary may need to alert Regional GC, Global Compliance or the parent board immediately, but the need to report is not identical to authority to transfer all personal data or investigation files abroad. Japanese privacy law, contractual confidentiality, foreign data restrictions, any non-disclosure obligation in an order and the investigative purpose should be assessed before wholesale transfer. The roles of Japanese counsel and global legal leadership should be agreed early.
6. Connect the Authority Response to Board Oversight, Disclosure, Insurance and Crisis Communications
An investigation becomes a corporate-governance issue when material legal, financial or reputational exposure exists. The board, statutory auditors, audit and supervisory committee or audit committee should receive a disciplined account of verified facts, unknowns, authority powers, materials produced, immediate legal risks and the next investigative steps. If senior management may be implicated, an independent reporting and decision-making structure may be required.
For listed companies, an inspection or search does not mechanically trigger identical timely disclosure in every case. The analysis depends on materiality, the nature of the suspected conduct, potential sanctions or criminal exposure, financial and business impact, and the state of the facts. The July 2026 TSE Guidebook for Timely Disclosure and the 2026 revision of Japan’s Corporate Governance Code are important current reference points. Legal, finance, IR, the audit function and the financial auditor should work from one chronology.
Crisis communications should not be reduced to silence or categorical denial. An early statement that “no wrongdoing occurred” or that the issue was “an isolated employee matter” may create a second crisis if later evidence points elsewhere. Conversely, prolonged silence about verified material facts can damage relationships with investors, customers, employees and lenders. Public statements should distinguish confirmed facts, unresolved issues and process, and be capable of being updated without contradiction.
Parallel notice obligations should also be mapped. D&O and other insurance policies, financing covenants, material contracts, W&I or other M&A rights, and customer or partner agreements may contain independent deadlines. A company can handle the inspection correctly and still lose insurance coverage or contractual rights if those clocks are ignored.
7. Preparedness Determines the Quality of the Response: Treat the Dawn-Raid Protocol as Crisis Infrastructure
A useful dawn-raid and regulatory-response protocol is much more than a list of phone numbers. It should assign responsibilities for reception, review of warrants and notices, internal escalation, outside counsel, IT support, meeting-room and access logistics, escorts for officials, production logs, evidence preservation, employee communications, individual-counsel conflicts, overseas-headquarters coordination, board reporting and external communications.
The protocol should be tested through realistic simulations. The company should know who acts at a regional office before headquarters counsel arrives, who controls cloud administration, how business use of messaging applications or personal devices affects preservation, and who makes company decisions if a senior executive is personally within scope. A paper-era exercise focused on locating file cabinets is insufficient for a 2026 investigation environment.
The authority’s departure does not end the crisis. The company should prepare a same-day chronology of the process, company responses, materials produced or removed, systems accessed, relevant custodians and unresolved issues; continue the preservation hold; and then activate the appropriate combination of internal investigation, leniency or other procedural options, regulatory submissions, disclosure, insurance, lender and counterparty notices, employee advice and remediation.
SAKURA Law Office and Managing Partner Kenshiro Michishita advise on JFTC, FSA, Local Finance Bureau, PPC and law-enforcement matters as integrated corporate-crisis work. The goal is not simply to complete the first day without incident. The response should be designed from the outset for the administrative or criminal process that follows, board accountability, business continuity and restoration of corporate value.
Frequently Asked Questions — Regulatory Inspections and Dawn Raids in Japan
Q1. What should a company do first when regulators or law-enforcement officials arrive unexpectedly?
Verify the agency, officials and identification and review any warrant, notice, order or JFTC inspection document. Centralize communications, contact outside counsel immediately, start a contemporaneous production and activity log, and suspend relevant automatic deletion. Reception staff should not improvise substantive explanations.
Q2. Can a company refuse a JFTC Article 47 on-site inspection?
It should not be treated as an ordinary voluntary request. Article 47 measures carry administrative duties backed by sanctions. The company should comply with lawful process while documenting scope and promptly evaluating any available objection or complaint procedure.
Q3. Must Japanese authorities wait until outside counsel arrives?
Not necessarily. The JFTC may permit attorney attendance to the extent it does not interfere with the inspection, but its guidelines do not require officials to wait for counsel. A company likewise cannot unilaterally suspend lawful execution of a criminal warrant.
Q4. Should the company interview employees before the authority does?
Sometimes, but sequencing is critical. Intensive interviews immediately before official questioning can create allegations of account coordination and may contaminate memory. Preserve and review objective evidence first and have counsel coordinate the interview plan with the known authority process.
Q5. Are all communications with lawyers privileged from Japanese authorities?
No. Japan does not apply one broad U.S.-style corporate attorney-client privilege across all administrative and criminal procedures. The JFTC Determination Procedure and the protections in Article 105 of the Code of Criminal Procedure are limited regimes with different requirements.
Q6. Is JFTC leniency still relevant after an on-site inspection?
Potentially. The result depends on the conduct, existing applications, timing and cooperation framework. Where cartel or bid-rigging risk exists, the company should assess leniency promptly rather than waiting for a complete internal investigation.
Q7. Can police or prosecutors obtain cloud or SaaS data?
Digital data can fall within criminal investigative measures. Since May 21, 2026 the Code of Criminal Procedure includes an electronic-record production order. The precise scope depends on the warrant or order, access rights, data architecture, location and other facts. The company should be able to explain its systems without altering the evidence environment.
Q8. May a Japanese subsidiary immediately send all investigation materials to overseas headquarters?
Not automatically. Reporting may be necessary, but personal information, confidentiality obligations, foreign data restrictions, non-disclosure terms in an order and investigation strategy should be reviewed before wholesale transfer.
Q9. Must a listed company immediately disclose every regulatory inspection or search?
No single rule applies to every event. Materiality, potential sanctions or criminal exposure, financial and operational impact, the stage of the facts and market circumstances must be assessed under the TSE timely-disclosure framework. Waiting for a final investigation report is not always appropriate either.
Q10. What is the most valuable preparation before any authority visit?
A tested dawn-raid protocol supported by a current data map, clear escalation authority and an emergency outside-counsel arrangement. Simulations involving reception, facilities, IT, legal, management and regional offices are more valuable than a manual that has never been used.
About the Legal Update Series by Kenshiro Michishita
SAKURA Law Office publishes the Legal Update series through the profile of Managing Partner Kenshiro Michishita, addressing corporate law, M&A, cross-border transactions, international disputes, financial regulation, data protection, AI and technology, corporate crisis management, internal investigations, third-party committees, defamation and reputation, Web3 and crypto, intellectual property and employment law for Japanese and international businesses.
This twenty-second edition follows No. 21 on corporate misconduct investigations and third-party committees and addresses the point at which public authority enters the matter. Distinguishing administrative supervision from criminal compulsion, while integrating digital evidence, internal investigation, board oversight and disclosure, is now a core element of crisis management for both Japanese and foreign-invested companies.
SAKURA Law Office — Official Website Kenshiro Michishita — Managing Partner Profile
How SAKURA Law Office Can Assist
SAKURA Law Office advises on JFTC investigations, FSA and Local Finance Bureau supervision and inspections, PPC report requests and on-site inspections, and police and prosecutorial searches, seizures and voluntary investigations in Japan.
Depending on the matter, our work may include first-response support for a dawn raid, review of warrants and written authority, document and digital-data production, JFTC leniency and cooperation strategy, internal investigations and third-party committees, digital forensics, employee interviews and individual-representation conflicts, personal-data incidents, board and audit reporting, TSE disclosure, insurance and lender notifications, crisis communications and remediation. In cross-border matters, we coordinate in English with overseas headquarters, General Counsel, foreign law firms and technology or forensic specialists.
Contact
For urgent advice concerning a regulatory inspection, administrative investigation, dawn raid, criminal search and seizure, internal investigation or related corporate-crisis matter in Japan, please contact SAKURA Law Office.
SAKURA Law Office
4F Ark Hills South Tower, 4-5 Roppongi 1-chome, Minato-ku, Tokyo 106-0032, Japan
Kenshiro Michishita, Managing Partner
Web: https://sakura-lawyers.jp/en/
Principal References
1. Japan Fair Trade Commission — Legislation & Guidelines: Antimonopoly Act and investigation materials — Official English access page; Japanese texts control
2. JFTC — Guidelines on Administrative Investigation Procedures under the Antimonopoly Act — Official Japanese text; current published guideline
3. JFTC — Overview of Administrative Investigation Procedures for Alleged Antitrust Cases — English reference material
4. JFTC — Determination Procedure — Official Japanese materials on qualifying confidential attorney communications
5. JFTC — Special Feature on the New System under the Amended Antimonopoly Act — English overview of leniency/cooperation and Determination Procedures
6. JFTC — Surcharge Leniency Program — Official Japanese current materials
7. JFTC — Policies Concerning Commitment Procedures — Official English access page
8. JFTC — FY2025 Enforcement of the Antimonopoly Act — Official Japanese release, June 8, 2026
9. Financial Services Agency — Supervisory Approaches — English reference document
10. Financial Services Agency — List of Supervisory Guidelines — Current versions effective October 1, 2026; English PDFs available for major categories
11. Financial Services Agency — Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, Part II — Current Japanese text; continuous monitoring framework
12. Personal Information Protection Commission — Laws and Policies — English reference materials for the APPI; consult current Japanese text
13. Personal Information Protection Commission — FY2025 Annual Report — Official Japanese report published July 2026
14. Code of Criminal Procedure — e-Gov Laws — Official Japanese text, including Articles 105, 105-2 and 218
15. Ministry of Justice — 2025 Act Amending the Code of Criminal Procedure and Related Acts — Official legislative materials
16. Rules of Criminal Investigation — e-Gov Laws — Official Japanese text, current version
17. Tokyo Stock Exchange — Guidebook for Timely Disclosure of Corporate Information — English access page; current Japanese guidebook dated July 2026
18. FSA / Tokyo Stock Exchange — Finalization of Japan’s Corporate Governance Code (2026 Revision) — Official English release
19. SAKURA Law Office — Official Website
20. Kenshiro Michishita — Managing Partner Profile, SAKURA Law Office
Disclaimer
This article provides general information based on Japanese statutes, official materials and generally applicable practice publicly available as of October 5, 2026. It does not constitute legal advice or a legal opinion concerning any specific inspection, investigation or search. The powers of a regulator or law-enforcement body, the duties of a company or individual to cooperate, document production, interviews, search and seizure, electronic-record production orders, communications with counsel, leniency, administrative sanctions, criminal exposure, market disclosure, personal information and cross-border data transfers depend on the applicable statute, regulated industry, procedural stage, wording of warrants or orders, data architecture, the status of the persons involved and subsequent legal developments. Any company receiving an inquiry, inspection notice, production order, warrant or unexpected visit from an authority should obtain prompt advice based on the specific document and facts and the laws, rules and supervisory materials then in force.