[Understand in 5 Minutes] What Is Anti-Social Force Screening? A Thorough Guide to Scope and Response Procedures!

What Is an Anti-Social Force Check?

An "Anti-Social Force Check," also known as a "Compliance Check," is the process of verifying whether a business partner belongs to or has ties to anti-social forces before commencing a transaction. Anti-social forces are individuals or groups that "pursue economic benefits by utilizing violence, force, and fraudulent methods." This includes organized crime groups (yakuza), companies affiliated with such groups, corporate racketeers (sokaiya), groups that exploit social movements for profit, and special intelligence violence groups.

In addition to organized crime groups, this also includes "quasi-organized crime groups" that habitually engage in violent acts such as assault or injury in entertainment districts, as well as "sympathizers" who maintain actual ties to organized crime while concealing those relationships on the surface.

[Ministry of Justice] Guidelines for Companies to Prevent Damage Caused by Anti-Social Forces

Why Are Anti-Social Force Checks Necessary?

Transactions with anti-social forces lead to providing funds for their illegal activities. Even if a transaction appears legally sound, if company funds reach anti-social forces, they may be used for gang conflicts, drug smuggling, or fraud that victimizes the general public.
Conversely, if no companies, organizations, or individuals conduct business with anti-social forces, their funding sources will be cut off, rendering them unable to operate.

Based on this perspective, the Ministry of Justice issued the "Guidelines for Companies to Prevent Damage Caused by Anti-Social Forces" in 2007, strongly urging companies to sever ties with and cooperate in the exclusion of anti-social forces. Local governments have also enacted "Organized Crime Exclusion Ordinances," which prohibit companies from providing benefits to anti-social forces and establish measures to be taken regarding real estate transfers and other activities.

These efforts to minimize the activities of anti-social forces have been adopted by many companies, and conducting business with such groups has become a significant risk for any enterprise.
However, many anti-social organizations appear to be conducting legitimate economic activities on the surface. Caution is required, as cases often arise where an organization is discovered to be engaged in criminal activities only after an investigation.

Even if you were unaware that the counterparty was an anti-social force, the fact that a transaction took place will inevitably lead to a loss of social credibility. To avoid such risks, anti-social force checks have now become an essential task when conducting business. To avoid facilitating criminal acts, it is important to verify that a business partner is legitimate from the outset and to refrain from establishing a relationship if issues are identified.

Risks Associated with Transactions Involving Anti-Social Forces

There are two main risks associated with transactions involving anti-social forces.

1. Risk of Management Crisis or Bankruptcy Due to Loss of Social Credibility

If a company knowingly conducts business with an anti-social force while concealing the relationship, it will be judged as having ties to such groups, resulting in a compliance violation. This may lead to penalties, administrative guidance, the suspension of loans from financial institutions, or even delisting.
There are also risks even if the company was unaware that the counterparty was an anti-social force. For example, under the Tokyo Metropolitan Organized Crime Exclusion Ordinance, if a transaction was conducted unknowingly, it is not considered a violation of the prohibition on providing benefits. In this case, no penalties are imposed.
However, even if the company was unaware, the fact that the transaction occurred remains. This can damage the company's reputation, lead to the termination of relationships by important business partners, or result in claims for damages due to reputational harm, causing significant financial loss. If the company's operations become unsustainable due to such penalties or loss of credibility, it could lead to bankruptcy.

2. Risk of the Company or Employees Becoming Involved in Crimes Such as Extortion

If a company conducts business with an anti-social force or an affiliated entity, it may become subject to unreasonable demands. If the company unknowingly enters into such a transaction, it is often difficult to sever the relationship later, even after realizing the nature of the counterparty.

When attempting to terminate a contract, the company may be threatened with the public disclosure of its ties to anti-social forces and subjected to extortion or other unreasonable demands.
Furthermore, not only the company but also individual employees may be threatened, and in some cases, employees may suffer long-term victimization without the company's knowledge. Therefore, anti-social force checks must be performed to prevent operational damage and harm to employees.

How Far Should Anti-Social Force Checks Go? 3 Scopes and Timing

The scope of anti-social force checks generally includes business partners, company employees, executives, and shareholders. Below, we confirm the details of the scope and the appropriate timing for these checks.

1. Business Partners

Checks on business partners should cover not only the company itself and its executives but also important external stakeholders such as major shareholders, corporate tax accountants, and legal counsel.

For new business partners, investigations must be conducted before the transaction begins. Since results may not be available before signing a contract, ensure that the contract includes a clause stating that the agreement will be terminated if the counterparty is found to be an anti-social force.
If the counterparty requests the removal of such a clause or refuses to sign, it is a red flag that the company requires caution. Including such an "anti-social force clause" allows for immediate action if the counterparty is later identified as an anti-social force.

Existing business partners must also be investigated. Even if there were no issues previously, circumstances can change, and they may become involved with anti-social forces. Even for companies that have been investigated once, conduct periodic checks as a precaution. Anti-social force checks should be performed at least once every three years.

If a contract is signed without an anti-social force check and the partner is later found to be an anti-social force, the directors who failed to exercise due diligence may be held liable for a "breach of the duty of care." Failure to conduct appropriate investigations can lead to significant issues.

2. Employees and Executives

It is also necessary to verify that employees, including part-time staff, have no ties to anti-social forces. Even for students who have not yet joined the company, caution is necessary as modern social media can facilitate connections between students and organized crime. There have been actual cases where students were involved in robbery, injury, and fraud.

For executives, it is recommended to conduct checks after their appointment is decided but before they take office. Since executives hold positions of responsibility, discovering ties to anti-social forces after they take office can impact the company's credibility. When a future executive is selected, verify their career history, including companies they previously worked for, and check the individual, their family, relatives, and any companies managed by their family.

3. Shareholders

The company's shareholders are also subject to anti-social force checks. These checks should be performed when increasing or changing shareholders. This applies to individuals, corporations, and organizations. In cases where a shareholder is an organization or corporation, it is necessary to verify external stakeholders such as representatives, executives, major shareholders, tax accountants, and lawyers, just as with business partners.

How to Respond When an Anti-Social Force Is Identified or Highly Suspected

If an anti-social force is identified or highly suspected as a result of a check, handle the situation with extreme caution. Prevent the occurrence of issues by consulting with lawyers or the police, or by terminating the transaction without disclosing specific details to the counterparty.

Consult with Lawyers or the Police

If a business partner is identified as an anti-social force or is highly suspected to be one, consult with the police or the "Center for Removal of Organized Crime."
These centers are established in every prefecture to provide relief to victims of organized crime and support exclusion activities. They also accept consultations on how to respond to anti-social forces.
Similarly, you can consult with the police regarding ensuring safety and identifying low-risk response methods if you have become involved with an anti-social force. It is important to consult with the police or the center as soon as you suspect the presence of anti-social forces. Maintaining regular contact makes it easier to receive support if a problem arises.

Consulting with a lawyer is another effective response method. When consulting a lawyer, they can act as an intermediary to handle the counterparty through legal channels. Depending on the situation, they may also coordinate with the police or the Center for Removal of Organized Crime.

Terminate the Transaction Without Disclosing Details

If you realize that the counterparty is an anti-social force, you must stop the transaction, even if it is near completion. Conducting business with an anti-social force could lead to significant damage later. It is important to inform the counterparty of the termination early and sever the relationship thereafter.

If a contract has not yet been signed, there is no need to explain the reason for declining the transaction; simply state that the transaction will be terminated without providing details. Explaining that they are an anti-social force may provoke a counter-argument. Since they might make unreasonable demands based on the reason provided, simply state the conclusion, such as "As a result of our internal transaction screening, we are unable to proceed with this transaction," and end the conversation.

If you discover the counterparty is an anti-social force after signing a contract, you can terminate the contract in accordance with the anti-social force clause and seek damages. Even if such a clause is not in the contract, under the "legality" requirement for valid contracts in the Civil Code, a contract with an illegal organization like an anti-social force may be considered invalid, allowing for termination and claims for damages. However, given the risk of retaliation, claims for damages should be considered carefully.

When a business partner is identified as an anti-social force, share the information internally as soon as possible and proceed carefully after consulting with the police or a lawyer. If you are subjected to claims for damages or harassment by an anti-social force, consider your response while consulting with the police or a lawyer.

Main Methods for Anti-Social Force Checks

Common methods for anti-social force checks include verifying reports in newspapers, television, and web media, checking information on administrative sanctions, and investigating rumors on social media or the web.

In addition to these common methods, uSonar provides a unique "Caution Flag" feature. This feature utilizes commercial registration data, the "LBC" corporate database, and over 30 years of newspaper and news data. By combining AI-based risk prediction with verification by a specialized research department, it achieves high-precision risk assessment.

While general anti-social force check tools are often limited to analyzing news data and negative information on social media, uSonar enables deeper risk detection by leveraging multi-faceted data sources and AI technology. This allows for the identification of risky corporate affiliations and connections, enabling a rapid response to companies with an increased risk of being anti-social forces.

For more details on anti-social force check methods, please refer to the article below.

Reference Article: [2024 Latest Edition] How to Conduct Anti-Social Force Checks? Overview and Importance of Anti-Social Force Checks▶

Summary

Anti-social force checks must be conducted on business partners, their external stakeholders such as major shareholders and legal counsel, company employees, executives, and shareholders. Implementation methods include internal investigations, inquiries to administrative agencies, and requests to specialized research institutions.
By checking before starting a transaction or hiring, it is possible to avoid establishing relationships with anti-social forces.

If a business partner is flagged during an anti-social force check, consult with the police, the "Center for Removal of Organized Crime," or a lawyer, and proceed with caution.

uSonar is a DX promotion company that maintains the largest corporate database in Japan, containing 12.5 million records. By utilizing our proprietary "High-Risk Database," you can easily perform primary screening of potential business partners and significantly reduce the man-hours required for anti-social force checks.
Detailed materials can be downloaded below. If you are concerned about reducing the man-hours for anti-social force checks, please use this as a reference.