In October, shocking news spread across Japan. It was discovered that Iwaki Credit Cooperative, a financial institution, had been providing funds to anti-social forces, and the Financial Services Agency issued a business improvement order, including a one-month suspension of operations.
The recipients of the funds are believed to be affiliated with organized crime groups, known overseas as the Yakuza.
Today, we’ll discuss important points to keep in mind regarding anti-social forces in Japan for businesspeople considering expanding into Japan.
The Current State of the Yakuza, Once the Representative Hansha
The Yakuza, a long-standing anti-social force, continues to have a significant presence in Japan. In recent years, the term “Hansha” has become synonymous with “Han-Shakaiitekiseiryoku” (anti-social forces), and the Yakuza are a representative example of this.
My personal experience suggests that in modern Japan, as long as one’s business is legal and ethical, they are rarely threatened or demanded money from the Yakuza. While it used to be the case that ordinary city shops would occasionally be asked for money by the Yakuza, this is no longer the case.
The growing distance between the Yakuza and ordinary citizens and businesses stems from the “Organized Crime Exclusion Ordinances” enacted in all prefectures in Japan in 2011. While the details of each ordinance vary by municipality, each prefecture’s organized crime exclusion ordinance includes provisions that target not only the Yakuza but also “those with close social ties to organized crime groups.” In police practice, these individuals are referred to as “close associates” and are subject to warnings and guidance. Those deemed to be close associates are highly likely to be excluded from public bidding, licensing, and financial transactions.
Please rest assured that thanks to the existence of the Organized Crime Exclusion Ordinance, which serves as a “shield” for law-abiding citizens and businesses, the number of cases in which people feel direct pressure from the Yakuza has decreased significantly.
Hangure and Tokuryu: New Forces of Hansha
Meanwhile, in recent years, Hangure (a type of Hansha that occupies a middle ground between the Yakuza and ordinary citizens), anonymous, mobile criminal groups, have become prominent, replacing the Yakuza. Anonymous mobile criminal groups are called “Tokuryu,” an abbreviation of the Japanese term “Tokumei-Ryudougata-Hanzai-Group.” In reality, they are very similar to Hangure.
Legally, Hangure and Tokuryu have no clear definition, and they are not directly subject to the Anti-Boryokudan Act. However, in practice, they are treated as Hansha and are excluded from the perspective of corporate risk, just like organized crime.
Criminal groups believed to be led by Hangure or Tokuryu have committed a series of robberies targeting ordinary citizens, including a robbery at a luxury watch shop. Compared to the Yakuza, they do have the potential to inflict some kind of harm.
In particular, specialized fraud is a potential threat to individuals and businesses outside of Japan. There are various types of special fraud. One example is when a scammer calls pretending to be a police officer and demands money, saying, “Your relative has been arrested for a sex crime. We need you to pay a settlement with the victim.”
However, since special frauds are generally communicated in Japanese, readers who understand Japanese may be able to get away with such a call by saying, “I barely understand Japanese.” This is because foreigners who do not speak Japanese are less likely to be targeted. Of course, we cannot deny the possibility that special frauds targeting foreigners will occur in the future.
Furthermore, while Hangure and Tokuryu scams target ordinary Japanese people, they often use financially struggling young people, the elderly, and women as tools to make money.
While caution is necessary against Yakuza, Hangure, and Tokuryu, it is important to gain knowledge, take proper precautions, and “experience the right kind of fear.” Blind fear will not lead to effective prevention.
How Companies Can Prevent Transactions with Hansha
As mentioned above, all prefectures in Japan have enacted anti-yakuza ordinances, and systems have been established to prevent companies from engaging with the Yakuza.
However, readers outside of Japan may be thinking, “The Yakuza are an underground organization. If that’s the case, how can we know who the Yakuza are?”
It’s not uncommon for Japanese Yakuza to have offices with bold signs displaying their organization name, which distinguishes them from overseas anti-social forces. However, the concerns mentioned above are not unfounded, and it’s safe to assume that they will conceal their identity as Yakuza, especially when engaging in economic activities.
As a solution to this problem, there are companies in Japan that offer “Hansha Checks.” These companies compile databases of public and court records and news reports. When customers inquire about their business partners or companies or individuals they are considering doing business with, they can find out what past issues the organization has had. In some cases, Hansha Checks can reveal not only Yakuza but also Hangure and Tokuryu.
I have used Hansha Check for Japanese companies several times, and I was able to access quite detailed data, such as records of employees who have committed crimes at the company and civil lawsuits.
Here, we list companies in Japan that provide Hansha Check for overseas companies, so please use this as a reference.
In addition to Hansha Check, a common countermeasure taken by companies is to include an “exclusion clause for organized crime” in contracts. This clause requires the contracting party to guarantee that they are not a Hansha, and if it is discovered that the party is a Hansha, the contract can be terminated at any time and compensation can be claimed.
There are also anti-yakuza organizations that work with the police.
If it becomes clear that a company is involved in transactions with Hansha, it clearly faces reputational and other risks. Overseas companies are no exception.
Hansha checks are an effective and easy-to-understand solution to avoid such ties.
On the other hand, there are organizations with names such as the “Yakuza Expulsion Promotion Center” that take a more systematic approach to Yakuza countermeasures. They work with police departments across the country, and although their names vary, they exist throughout Japan, so they can provide advice on what countermeasures to take.
