To meet Japan’s AML requirements, businesses must ensure that their clients have no relation to the Japanese Mafia or any other “anti-social” elements. In this article, we delve into the concept of “Anti-Social Forces” and what it means for compliance.
What are Anti-Social Forces?
Anti-Social Forces (ASF) is a term applied to Japanese criminal syndicates and organized crime groups, known as the boryokudan. The term is also used in reference to fraudsters, blackmailers, and any other individuals that negatively impact society.
There is no concrete definition of “Anti-Social Forces,” as the Japanese government has refused to specify the term, arguing that different bodies may belong to ASF at different times.
Interestingly, not all groups that belong to ASF are illegal in Japan. For instance, some members of the Japanese Mafia, otherwise known as yakuza, are public figures and even attend parties held by ministries.
How to comply with Anti-Social Forces (ASF) requirements
Japan’s Law on Prevention of Organized Crime prohibits businesses from offering services to anyone related to Anti-Social Forces.
To comply with the law, businesses must follow these four steps:
- Сheck customers against Anti-Social Forces (ASF) databases at the onboarding stage;
- Update their AML compliance policy to include procedures on dealing with ASF;
- Publish a notice on the company website stating that there will be no relationship with ASF;
- Establish Suspicious Activity Reporting and record-keeping systems with regard to ASF.
Sanctions for non-compliance: Companies can face tough sanctions, including fines and delisting, for having business relationships with ASF. In case of severe violations, the offending company can itself be designated an ASF, revoking it of any financial relationships with customers and partners. In most cases, this results in total seizure of business activity.
How to detect Anti-Social Forces
To avoid onboarding a member of the Japanese Mafia or partnering with the front company of a crime syndicate, businesses should conduct Anti-Social Forces screening and Adverse Media Checks during onboarding.
Anti-Social Forces List
Although the Japanese police have their own Anti-Social Forces List, it’s only available to a few major banks. Also, this list is not a complete database, since it mostly contains names of gangsters who have registered with the police. Of course, some members of the Yakuza have managed to stay under the radar of police in order to use financial services.
Anti-Social Forces databases
A more reliable alternative to the Anti-Social Forces List of Japan’s police are databases containing the names of various anti-social groups, businesses, and individuals. Among these are the “Japan Police Most Wanted” list, “Japan Malicious Money Lenders” list, “Designated Gangster” database, as well as the exclusion lists of various ministries.
To gain access to these resources, businesses can directly contact the institutions responsible for them. However, this process can be cumbersome, as there are many police departments and ministries to contact. Instead, companies can reach out to an ASF database provider to speed up this process.
Adverse Media Check
Сhecking customers against various lists and databases is not enough, as they don’t guarantee full coverage of all potential ASF elements. Therefore, businesses should additionally perform adverse media screening, which is to check if a customer has been mentioned in negative news coverage.
Suggested read: How Businesses Benefit from Adverse Media Screening.
There are both local and international providers of adverse media checks. Whether to choose a local or an international one depends on a company’s needs.
The pros and cons of Japanese adverse media check providers
The benefits of working with a local provider include:
- Advanced recognition of the Japanese language by AI systems;
- Ability to directly contact Japanese police in difficult cases;
- Superb coverage of Japanese media, with some providers maintaining adverse media that dates back to the previous century.
The disadvantages include:
- Limited coverage (local providers only cover Japanese news);
- Local providers often only focus on media screening without checking customers against AML, PEP, and sanctions lists.
It’s worth repeating that even Japanese providers don’t have access to the Anti-Social Forces List.
The pros and cons of global adverse media check providers
The advantages of international providers include:
- Multiple markets coverage;
- A variety of adverse media screening sources, including PEP and sanctions lists.
The disadvantages include:
- Limited number of resources and tools in a particular market. For instance, an international provider will unlikely be able to contact the Japanese police if needed;
- Some global providers may not have AI capabilities that properly recognize certain languages, especially those with Chinese or Japanese characters.
As a rule of thumb, if a company onboards not only Japanese clients, then a solution with worldwide coverage might be preferable. However, businesses should ensure that this solution is proficient at analyzing Japanese media sources.
Compliance with Anti-Social Forces (ASF) regulation is essential for businesses that operate in Japan. To ensure that customers have no connection to the anti-social elements of Japanese society, companies should introduce proper ASF monitoring that includes AML databases and adverse media screening. In our experience, reaching out to a provider that offers both of these options will allow businesses to onboard Japanese customers in the most efficient way.