(Understand in 5 Minutes) What Is Anti-Social Forces Screening? A Thorough Explanation of the Scope and Response Procedures!

What Is an Anti-Social Forces Check?

An "Anti-Social Forces Check," also known as a "Compliance Check," is the process of verifying whether a potential business partner is affiliated with anti-social forces or associated with organizations linked to them before commencing a business relationship. Anti-social forces are individuals or groups that "pursue economic benefits through violence, force, or fraudulent methods." This includes organized crime groups (yakuza), companies affiliated with such groups, corporate racketeers, groups posing as social activists, and special intelligence violence groups.

In addition to organized crime groups, the scope of verification 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 hidden ties to organized crime while appearing legitimate.

[Ministry of Justice] Guidelines for Enterprises to Prevent Damage from Anti-Social Forces

Why Are Anti-Social Forces Checks Necessary?

Conducting business with anti-social forces leads 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 harms the general public.
Conversely, if no companies, organizations, or individuals conduct business with anti-social forces, their funding sources will be cut off, effectively halting their activities.

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

Efforts to minimize the activities of anti-social forces have been adopted by many companies, and conducting business with them has become a significant corporate risk.
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 involved in criminal activities only after investigation.

Even if a company is unaware that the counterparty is an anti-social force, the loss of social credibility is inevitable if a transaction occurs. To avoid such risks, anti-social forces checks have become an essential task in modern business. To avoid facilitating criminal acts, it is crucial to verify that a business partner is legitimate from the outset and to refrain from engaging with them if issues are identified.

Risks Associated with Transactions Involving Anti-Social Forces

There are two primary 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 anti-social forces while concealing the relationship, it is considered a compliance violation. This may lead to penalties, administrative guidance, suspension of loans from financial institutions, or delisting from stock exchanges.
Even if a company conducts business without knowing the counterparty is an anti-social force, risks remain. For example, under the Tokyo Metropolitan Organized Crime Exclusion Ordinance, if a transaction is conducted unknowingly, it may not constitute a violation of the prohibition on providing benefits. In such cases, there are no penalties.
However, the fact that a transaction occurred remains. This can damage the company's reputation, lead to the termination of relationships with key business partners, or result in claims for damages due to brand image degradation, causing significant financial harm. If the company's operations become unsustainable due to these penalties or loss of credibility, it may lead to bankruptcy.

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

If a company engages in business with anti-social forces or related entities, it may become subject to unreasonable demands. If a company enters into a contract unknowingly, it is often difficult to sever the relationship later, requiring extreme caution.

Attempting to terminate a contract may lead to threats of public exposure regarding the company's involvement with anti-social forces, followed by extortion.
Furthermore, individual employees may be threatened, and in some cases, employees may be victimized for long periods without the company's knowledge. Therefore, anti-social forces checks must be performed to prevent operational damage and harm to employees.

How Far Should Anti-Social Forces Checks Go? Three Scopes and Timing

The scope of anti-social forces checks generally includes business partners, employees, executives, and shareholders. Below are the details regarding the scope and timing of these checks.

1. Business Partners

Checks on business partners should include not only the company and its executives but also significant 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, it is advisable to include a clause stating that the contract will be terminated if the partner is found to be an anti-social force.
If a counterparty requests the removal of such a clause or refuses to sign, it is a red flag. Including an "anti-social forces 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. Even for companies that have been vetted once, periodic re-investigation is necessary. Anti-social forces checks should be conducted at least once every three years.

If a contract is signed without a check and the partner is later found to be an anti-social force, 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 necessary to verify that employees, including part-time staff, have no ties to anti-social forces. Even for students before they join the company, caution is required as modern social media can facilitate connections between students and organized crime. There have been actual cases where students were involved in robbery, injury, or fraud.

For executives, it is recommended to conduct checks after their appointment is decided but before they take office. As executives hold positions of responsibility, discovering ties to anti-social forces after they take office can damage the company's credibility. When a new executive is selected, their career history, including previous employers, as well as the backgrounds of their family, relatives, and companies managed by them, should be verified.

3. Shareholders

Shareholders are also subject to anti-social forces checks. These checks should be performed when increasing or changing shareholders. This applies to individuals, corporations, and organizations. For corporate or organizational shareholders, it is necessary to verify external stakeholders such as representatives, executives, major shareholders, tax accountants, and legal counsel, just as with business partners.

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

If an anti-social force is identified or highly suspected as a result of a check, careful action is required. Prevent problems by consulting with lawyers or the police, or by terminating the transaction without disclosing specific details to the counterparty.

Consulting with Lawyers or the Police

If a business partner is identified as an anti-social force or is highly suspected, consult 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 deal with anti-social forces.
Similarly, the police can provide advice on ensuring safety and low-risk response methods when dealing with anti-social forces. It is important to consult the police or the center as soon as a suspicion arises. Maintaining regular contact makes it easier to receive support if a problem occurs.

Consulting a lawyer is another effective approach. A lawyer can intervene and handle the counterparty through legal channels. Depending on the situation, they may coordinate with the police or the Center for Removal of Organized Crime.

Terminating Transactions Without Disclosing Details

If you discover that a counterparty is an anti-social force, you must stop the transaction, even if it is near completion. Engaging with them could lead to significant future damage. It is important to inform them of the termination early and sever the relationship.

If a contract has not yet been signed, there is no need to provide a specific reason for declining the transaction. Stating that the counterparty is an anti-social force may provoke a counter-argument or lead to unreasonable demands. To avoid this, simply state, "As a result of our internal transaction review, we are unable to proceed," and conclude the conversation.

If you discover the counterparty is an anti-social force after signing a contract, you can terminate the contract based on the anti-social forces clause and seek damages. Even if such a clause is not in the contract, under the principle of "legality" in the Civil Code, contracts with illegal organizations like anti-social forces 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 cautiously after consulting with the police or a lawyer. If you are subjected to claims for damages or harassment by anti-social forces, consider your response while continuing to consult with legal and law enforcement professionals.

Primary Methods for Anti-Social Forces Checks

Common methods for anti-social forces checks include verifying reports in newspapers, television, and web media, checking administrative disposition information, and conducting reputation surveys on social media and the web.

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

While typical anti-social forces check tools are limited to analyzing news data and negative information on social media, uSonar leverages diverse data sources and AI technology to enable risk detection based on deeper information. This allows for the identification of risky corporate affiliations and connections, enabling a rapid response to companies with elevated anti-social force risks.

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

Reference Article: [2024 Latest Edition] What Are the Methods for Anti-Social Forces Checks? Overview and Importance ▶

Summary

Anti-social forces checks must be conducted on business partners, their major shareholders, external advisors such as legal counsel, company employees, executives, and shareholders. Implementation methods include internal investigations, inquiries to administrative agencies, and requests to specialized research institutions.
By conducting checks before starting a business relationship or hiring, companies can avoid establishing ties with anti-social forces.

If a business partner or other entity is flagged during an anti-social forces check, consult with the police, the Center for Removal of Criminal Organizations, or legal counsel, 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 "Cautionary Database," you can easily perform primary screening of target companies and significantly reduce the man-hours required for anti-social forces checks.
Detailed materials can be downloaded below; please refer to them if you are concerned about reducing the operational burden of anti-social forces checks.