Banks to tighten screening for individual loans

September 19, 2017

TOKYO- The Japanese banking industry plans to tighten the screening of loan applications from individuals to avert the risk of having financial ties to organized crime.

The Japanese Bankers Association, or Zenginkyo, will launch as early as January a borrow background check system that uses the National Police Agency's database on organized crime syndicates in order to verify whether loan applicants have any links to antisocial groups.

The stricter screening will make it difficult for banks to grant loans on the same day as the filing of applications. Their brisk business of extending uncollateralized loans to bank card holders is expected to be affected.

In 2013, it was revealed that Mizuho Bank, the core banking arm of Mizuho Financial Group Inc. , had extended loans to people linked to gangster groups through a consumer credit company.

Alarmed by the scandal, Zenginkyo announced in 2015 plans to develop a system to check against the NPA database when screening loan applications from individuals.

Specifically, member banks of the association will refer to the NPA database through Deposit Insurance Corp. of Japan, an organization assigned with depositor protection. Jiji Press