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Japan banking industry says to tighten anti-mob measures
October 17, 2013 / 11:04 AM / 4 years ago

Japan banking industry says to tighten anti-mob measures

TOKYO (Reuters) - Japan’s banking industry body said it plans to share its data on organized crime syndicates with consumer credit agencies and other financial companies as part of new measures to combat illicit transactions.

Efforts by the country’s financial industry to shun organized crime syndicates have come under fresh scrutiny after Japan’s banking regulator reprimanded Mizuho Financial Group (8411.T) late last month over loans it made to mob members.

Takeshi Kunibe, chairman of the Japanese Bankers Association, told a news conference on Thursday it is considering additional anti-mob measures following the Mizuho case, including asking police to share its mob data.

Financial institutions have their own database to screen potential clients for any mob connection, but industry officials say smaller banks and non-bank lenders are not equipped with information systems as robust as those of top banks.

In the case involving Mizuho, Japan’s second-largest bank by assets, it was consumer credit company Orient Corp (8585.T), known as Orico, that failed to spot mob members when it made loans to them. Mizuho discovered the contracts among bulk loans it bought from Orico, one-fifth owned by Mizuho.

Banking industry officials say in addition to spotting mob members before banks extend credit, it is also critical that lenders quickly terminate transactions if they find out about problem clients that have slipped through screening process.

Despite the existing databases, industry insiders say it is not uncommon for banks to learn the true identity of clients after transactions are executed.

    In formally serving Mizuho with an order to improve its business practices, Japan’s Financial Services Agency said it was especially troubling that the bank failed to take action for more than two years after learning about the mob loans.

    Declining to directly comment on Mizuho’s failure to act promptly, Kunibe, who is also president of Sumitomo Mitsui Banking Corp SUMFGI.UL, part of Sumitomo Mitsui Financial Group (8316.T), said his bank is very alert to any transactions with organized crime syndicate members.

    He said the bank’s board receives reports twice a year on any loans accidentally extended to mob members, as well as receiving e-mail alerts depending on the seriousness of individual cases.

    Reporting by Taiga Uranaka; Editing by Kenneth Maxwell

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