In recent years, international email fraud cases have been occurring all over the world, where persons in the guise of trading partners contact companies by email using email addresses and domain names that closely resemble the official ones of such actual trading partners. Typically, the emails give false notices and instructions stating that the bank accounts for the remittance of purchase prices, for example, have changed. There are some cases where Japanese bank accounts are designated as the new remittance accounts in such notices and instructions.
For this type of email fraud case in Japan, the Act on Payment of Damage Recovery Benefits from Funds in Deposit Accounts Used for Crimes can be a useful tool for companies that have fallen victim to email fraud to attempt to recover their funds. The Act provides procedures for the extinguishment of rights to deposits in bank accounts and for the distribution of such deposits to persons who have suffered damage from criminal acts such as fraud, in order to help them to recover what they have lost.
Under the Act, if the bank considers, based on application by an attorney-at-law, that there is a likelihood that the subject bank account is being used for a criminal purpose, then the bank can freeze the bank account instantly. Since this procedure can be effected without any court judgement or order, victims can cause the banks to freeze bank accounts more expeditiously. If a bank freezes a bank account and, as the next stage, further believes that there is 'probable cause' to deem that the bank account is being used for a criminal purpose, then the bank is required to apply to the Deposit Insurance Corporation (DIC) to make a public notice to extinguish the rights of the account holder to the funds in the bank account. In cases where no-one (including other potential creditors of the account holder) files to exercise rights or enforces its rights against the account holder, for example by way of seizure, then the account holder's rights to the bank account will be extinguished, and the DIC will proceed with distributing the funds in the bank account to victims. Any bank account to which funds are transferred from the initial bank account that was used for criminal purposes is also subject to freezing so long as the other bank account is located in Japan.
Typically, the ill-gotten funds are transferred to another bank account or withdrawn as cash immediately after the receipt of the funds; therefore, it becomes more and more difficult to trace such funds as time advances. Further, to take advantage of the procedures provided under the Act, it is often necessary to cooperate with the Japanese police and prosecutors. Therefore, if any company has suffered damage from a fraud case related to Japan, it is most important to act swiftly and contact a Japanese attorney-at-law who specialises in the Act.
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