Bank 'goes against industry's antigang drive'

Bank 'goes against industry's antigang drive'

JAPAN - After learning Mizuho Bank received a business improvement order from the Financial Services Agency for failing to end transactions with organised crime groups, observers said the bank's actions go against ongoing industry efforts to sever ties with such groups.

"It's inconceivable nowadays that [the bank] left ties with antisocial forces untouched," a senior police official said after the FSA issued the order to the bank Friday. Police have made joint efforts with financial institutions to combat organised crime.

The financial industry watchdog said the bank failed to take steps to terminate such transactions though it was aware that loans totaling about ¥200 million (S$2.5 million) were extended to members of such groups through affiliated consumer credit companies.

In the area of financial services, measures have been taken to eliminate members of organised crime groups from transactions.

In November 2008, the Japanese Bankers Association, to which Mizuho Bank also belongs, hammered out a policy to eliminate affiliates of criminal organisations from loan transactions.

In September 2009, the association called on its member banks to create contract provisions effectively aimed at eliminating transactions involving gang members.

The Japan Securities Dealers Association, meanwhile, decided in September 2007 to let its member companies reject securities account transactions involving gang members. From January, the association's computer server was connected with that of the National Police Agency, which stores data on about 30,000 gang affiliates so that securities firms can automatically check the names of applicants for new accounts.

For public works projects and other economic activities that are considered to be financial sources for gang members, steps to contain such activities have been taken. In line with the government's guidelines, all prefectural governments introduced antigang ordinances by October 2011.

Under these ordinances, companies are required to confirm contracting partners are not affiliated with criminal organisations. Companies that have provided any financial benefits to gang members would be subject to admonishment or other measures by the prefectural public safety committees. If the companies in question fail to comply with such administrative measures, their names will be made public.

Regarding the Mizuho case, a senior police official involved in antigang activities said: "It's truly regrettable because the financial services industry has made the greatest effort among all industries in the antigang campaign, following a series of scandals in which securities companies and banks provided financial benefits to criminal groups and the Commercial Code was revised.

"To cut the flows of funds to them, it it essential that financial institutions take antigang measures."

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