5-Minute Guide: What Is Anti-Social Force Screening? A Comprehensive Explanation of Scope and Response Procedures

What Is Anti-Social Force Screening?

Anti-Social Force Screening, also known as compliance screening, is the process of verifying whether a potential business partner is affiliated with anti-social forces before entering into a transaction. Anti-social forces are individuals or groups that pursue economic gain through violence, intimidation, or fraudulent methods. This includes organized crime groups (yakuza), companies affiliated with such groups, corporate racketeers, social movement imposters, and special intelligence violence groups.

In addition to organized crime groups, the screening process must also include "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 superficially concealing their relationships.

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

Why Is Anti-Social Force Screening Necessary?

Transactions with anti-social forces provide funding 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, illegal 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 severed, effectively halting their operations.
Based on this principle, the Ministry of Justice released the "Guidelines for Companies to Prevent Damage Caused by 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 such groups has become a significant risk for any organization.
However, many anti-social organizations appear to be legitimate businesses on the surface. Caution is required, as many cases reveal that organizations are actually engaged in criminal activities upon further investigation.

Even if a company is unaware that a partner is an anti-social force, the fact that a transaction occurred can lead to an irreparable loss of social credibility. To avoid such risks, anti-social force screening has 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 an anti-social force while concealing the relationship, it is considered a compliance violation. This can lead to penalties, administrative guidance, suspension of loans from financial institutions, or even delisting from stock exchanges.
Even if a company conducts business without knowing the partner is an anti-social force, risks remain. For example, under the Tokyo Metropolitan Organized Crime Exclusion Ordinance, if a transaction was conducted unknowingly, it may not constitute a violation of the prohibition on providing benefits. In such cases, there are no legal penalties.
However, the fact that the 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 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 Employees or the Company Being Involved in Criminal Acts 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 a company unknowingly enters into such a transaction, it may find it difficult to sever the relationship even after discovering the truth.
Attempts to terminate the contract may be met with threats to expose the company's involvement with anti-social forces, leading to extortion or other unreasonable demands.
Furthermore, individual employees may be threatened, and in some cases, employees may suffer long-term harm without the company's knowledge. Therefore, anti-social force screening must be conducted to prevent both corporate and personnel damage.

How Far Should Anti-Social Force Screening Go? Three Scopes and Timings

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

1. Business Partners

Screening business partners should include not only the company and its executives but also key external stakeholders such as major shareholders, corporate tax accountants, and legal counsel.

For new business partners, screening 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 partner requests the removal of such clauses or refuses to sign, it is a red flag. Including an "anti-social force clause" in the contract allows for immediate action if the partner is later identified as an anti-social force.

Existing business partners must also be screened. Even if there were no issues previously, circumstances can change, and partners may become involved with anti-social forces. Even if a company has been screened once, it should be re-screened periodically. Anti-social force screening should be conducted at least once every three years.

If a contract is signed without screening 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 of a good manager." 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 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 screening after their appointment is decided but before they take office. Since executives hold positions of responsibility, discovering their ties to anti-social forces after they take office can damage the company's credibility. Once a future executive is selected, verify their past employment history and check the backgrounds of the individual, their family, relatives, and any companies they manage.

3. Shareholders

Shareholders are also subject to anti-social force screening. This should be performed when adding or changing shareholders. Screening applies to individuals, corporations, and organizations. In the case of 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 Entity Is Identified or Highly Suspected

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If an anti-social check reveals that a party is an anti-social entity, or if there is a high probability of such an association, you must exercise caution in your response. Prevent potential issues by consulting with lawyers or the police, or by terminating the transaction without disclosing specific details to the other party.

Consulting with Lawyers or the Police

If a business partner is identified as an anti-social entity, or if there is a high probability of such an association, consult with the police or the Center for Removal of Criminal Organizations.
The Center for Removal of Criminal Organizations has offices in every prefecture and provides support for victims of organized crime and assistance for anti-organized crime activities. They also accept consultations regarding how to handle anti-social entities.
Similarly, you can consult with the police regarding how to ensure your safety and how to handle the situation with minimal risk if you have become involved with an anti-social entity. It is important to consult with the police or the center as soon as you suspect an association with an anti-social entity. Maintaining regular communication makes it easier to receive support should any issues arise.

Consulting with a lawyer is another effective approach. When you consult with a lawyer, they can act as an intermediary and guide you through the legal process for dealing with the other party. Depending on the situation, they may also coordinate with the police or the Center for Removal of Criminal Organizations to address the matter.

Terminating Transactions Without Disclosing Details

If you discover that the other party is an anti-social entity, you must halt the transaction, even if it is near completion. Engaging in business with an anti-social entity could lead to significant damage later on. It is crucial to inform the other party of the termination at an early stage and sever all ties thereafter.

If a contract has not yet been signed, there is no legal obligation to provide a reason for declining the transaction; therefore, you should terminate the relationship without disclosing specific details. Stating that the reason is their status as an anti-social entity may provoke a counter-argument. Since there is a risk that the other party might make unreasonable demands in response to your stated reason, it is best to simply state the conclusion, such as, "As a result of our internal transaction screening, we are unable to proceed with this business relationship," and end the conversation.

If you discover the party is an anti-social entity after a contract has been signed, you can terminate the contract in accordance with the anti-social force clauses and seek damages. Even if such clauses are not explicitly stated in the contract, under the principle of "legality" within the "validity requirements for contract content" of the Civil Code, contracts with illegal organizations such as anti-social entities may be considered invalid, allowing for contract termination and claims for damages. However, given the risk of retaliation, claims for damages should be considered with extreme caution.

Once a business partner is identified as an anti-social entity, you must share this information internally as soon as possible and proceed with caution after consulting with the police and legal counsel. In the unlikely event that you receive a claim for damages or are subjected to harassment by an anti-social entity, consider your response while maintaining close coordination with the police and your lawyer.

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Primary Methods for Anti-Social Checks

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

In addition to these standard methods, uSonar offers a unique "Caution Flag" feature. This feature leverages commercial registration data, the LBC corporate database, 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 check tools are limited to analyzing news data and negative information on social media, uSonar utilizes multifaceted data sources and AI technology to enable risk detection based on deeper insights. This allows for the identification of corporate affiliations and connections involving risk, enabling a rapid response to companies with an elevated risk of anti-social association.

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

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

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Summary

Anti-social checks must be conducted on business partners, their major shareholders, external parties such as legal advisors, as well as your own employees, executives, and shareholders. Implementation methods include internal research, inquiries to administrative agencies, and outsourcing to specialized research organizations.
By performing these checks before starting a transaction or hiring a new employee, you can avoid establishing relationships with anti-social entities.

If a business partner or other party is flagged during an anti-social check, consult with the police, the Center for Removal of Criminal Organizations, 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 "Caution Database," you can easily perform primary screening of target companies and significantly reduce the operational burden associated with anti-social checks.
Detailed materials can be downloaded below; please refer to them if you are looking to reduce the operational burden of your anti-social checks.