The Japanese government has confirmed that domestic banks with operations in the United States are required to adhere to sanctions imposed by Washington, meaning they are not permitted to carry out transactions on behalf of Hong Kong Chief Executive Carrie Lam.

The government confirmed its understanding of the requirement on Japanese banks in response to a written question from Jin Matsubara, a member of parliament from the Constitutional Democratic Party of Japan and a former chairman of the National Public Safety Commission, during a cabinet meeting on Tuesday.

“The government asks Japanese financial groups that have offices overseas to consider the fact that laws and regulations on sanctions in those countries may be stricter than those of Japan,” the government said in a statement issued after the cabinet meeting.

Matsubara has been a vocal supporter of Hong Kong’s independence and believes that confirmation from the Japanese government that financial institutions are required to freeze any of Lam’s bank accounts could have other consequences.

“My understanding is that the Japanese government has instructed Japanese banking groups with operations in the US not to deal with those designated for sanctions by the US, even outside the US jurisdiction,” Matsubara told This Week in Asia.

This means that if Lam does have accounts with Japanese banks that operate in the US and are therefore subject to the US regulations, those accounts will be frozen and she will not be able to open new ones with those banking institutions. The Japanese government statement makes no mention of restrictions on her travel.

“This now means that US sanctions will be automatically applied in Japan,” Matsubara said. “And it’s not just Carrie Lam, but other designated Chinese officials will have their accounts frozen now. This means they will have great difficulty if they want to sell real estate that they hold in Japan.

“I believe this will infuriate the leadership of the Chinese Communist Party, who are enormously rich and probably investing in Japan,” he added.

If his assessment is correct, then this development might prompt party members to move their assets out of Japan.

It is not clear whether Lam has any accounts with Japanese banks, but authorities said they were looking into the matter.

The US Office of Foreign Assets Control identifies Lam on its Sanctions List, which is available online, and lists her nationality as “Hong Kong”, her date of birth and details from her passport. It also lists two aliases and her home address.

The US Department of the Treasury in August imposed sanctions on Lam and 10 other people “for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong” through imposition of the national security law in June.

In making the move, it accused China of actions to “fundamentally undermine Hong Kong’s autonomy and democratic processes”, describing the national security law as “draconian”. It added that as well as infringing on the rights of the people of Hong Kong, the law permits China’s security services to “operate with impunity in the region”, and that its end effect would be “mandating ‘national security education’ in Hong Kong schools, undermining the rule of law and setting the groundwork for censorship of any individuals or outlets that are deemed unfriendly to China.”

Lam was singled out in the declaration as being “directly responsible for implementing Beijing’s policies of suppression of freedom and democratic processes”.

Matsubara said there was precedent in Japan for applying another country’s financial sanctions on targeted individuals, as SMBC Trust Bank did in October 2019 when it froze the accounts of Venezuelan diplomats who were subject to US sanctions.

Matsubara said he was a “staunch supporter of Hong Kong’s freedom” and that he has been in contact with Hong Kong democracy activist Agnes Chow, without offering details of his conversations with Chow.

“The overwhelming majority of the Japanese people are sympathetic to the Hong Kong people who want democracy, and the Japanese government should help them by openly and explicitly criticising the Chinese Communist Party,” he said.

Lam has previously admitted the sanctions on her are an inconvenience, but has also described them as “meaningless, as far as I am concerned”. She told Chinese state broadcaster CGTN she felt honoured to be trusted by Beijing to enforce the national security law.