Japanese gangsters are poised for a credit crunch after the country’s top banking lobby declared it was fed up with yakuza members defaulting on car and small-business loans and would work with police to cut them off.
The move comes amid a scandal engulfing Mizuho, Japan’s second-biggest financial group by assets, which said last month that it had supplied gang members with loans via Orient Corp, a consumer-finance affiliate.
Takeshi Kunibe, chairman of the Japanese Bankers Association, told reporters on Thursday that the group would team up with the National Police Agency to share information, so that gangsters seeking funds from about 200 domestic and foreign banks were cut off at the source.
After the scandal emerged, the Financial Services Agency ordered Mizuho to improve control and compliance functions, declaring them “seriously” flawed. Lending to “antisocial forces” went on for more than two years after it was detected, the FSA said. Mizuho said that transactions totalled Y200m ($2m), mostly for car loans.
Authorities and banks in Japan have struggled for years with the issue of how to deal with yakuza members, who tend to make one or two instalments to avoid prosecution for non-payment, then retain the rest.
In 2009, a bank set up by Tokyo governor Shintaro Ishihara to support small to midsized businesses collapsed, after a chunk of its loan portfolio found its way to the mob.
In 2010, the national police announced they were “doubling” efforts to clamp down on the yakuza. A year later, the police rolled out a law requiring loan applicants to sign a declaration that they were unaffiliated to the yakuza.
The Japan Securities Dealers Association, representing about 500 brokers and intermediaries, this year began screening prospective clients with a police database of tens of thousands of yakuza-affiliated individuals.
Thursday’s move by the JBA could put Japan’s banks on a similar footing.
The squeeze on mob lending could enjoy some success, said Jake Adelstein, a Tokyo-based writer and yakuza watcher, whose life is set to be dramatised in a biopic starring British actor Daniel Radcliffe.
But he warned that loans may simply be channelled to so-called “associate members”, who do not show up in checks.