THE FSA'S CONTINUING REACTION TO "ANTI-SOCIAL FORCES" LOANS
As noted in our updates in November and December 2013, in September 2013 Mizuho Bank, Ltd. ("Mizuho") was issued with a Business Improvement Order (the "Order") by the FSA. The Order was handed down on the basis of "serious problems" arising from 230 consumer-credit loans totalling over JPY 200 million (US$2.1 million) issued by Mizuho through its consumer credit affiliate, Orient Corp., to "anti-social forces", a common euphemism for organised crime in Japan. A follow-up investigation by the FSA found "serious problems" with Mizuho's conduct and Mizuho was subject to further FSA sanctions taking these findings into account. It has now also been announced that Mizuho's chairman, Takashi Tsukamoto, will resign on 31 March 2014, to take responsibility for the scandal.
In the wake Mizuho's difficulties, the FSA has announced that it will tighten its supervision and inspection rules in order to prevent a recurrence of similar issues. This includes strategic on-site review of financial institutions' anti-money laundering and anti-social forces controls, further co-operation with the Japanese National Police Association and the establishment of "special task forces" in respect of anti-money laundering and anti-social forces. These newly established "special task forces" are to be composed of experts in the field and are being created with the aim of enhancing cooperation with other regulatory bodies and upgrading the FSA's expertise in these areas, "including that on global best practices".
The FSA is also reported to be encouraging the holding companies of the two other large Japanese banks, MUFG and SMBC, to convert their corporate structures in line with the "committee" structure adopted by Mizuho in order to improve its corporate governance in the wake of the FSA's investigations.