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Matters Related to Elimination of Transactions with Anti–Social Elements

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Regarding Administrative Orders from the FSA

MHBK received the business improvement order from the Financial Services Agency (FSA) with respect to transactions with anti–social elements in relation to certain captive loans on September 27, 2013, and MHFG and MHBK received the business improvement order (including MHBK to cease transaction of certain captive loans in part) from the FSA on December 26, 2013. Based on the business improvement order, MHFG and MHBK submitted business improvement plans to the FSA on October 28, 2013 and January 17, 2014, respectively.

MHFG has always positioned severing ties with anti–social elements as one of its most important management issues. We have been focusing on preventing and terminating such transactions as those with anti–social elements.

Nevertheless, we gravely accept the highly regrettable fact that our framework to prevent and sever relationships with anti–social elements was inadequate for certain captive loans.

We have steadily implemented improvement measures pursuant to the business improvement plan including further enhancement of frameworks to sever relations with anti–social elements and improvement of corporate culture. Our specific efforts are as follows.

Improvement Measure Frameworks

1. Measures to Prevent Recurrence
—Elimination of anti–social element transactions for the captive loans (loans through captive affiliates)—

  • Termination of captive loans with anti–social elements
  • Increase stringency of entry checks of anti–social elements
  • Increase stringency of post–entry checks of anti–social elements
  • Introduce a clause to exclude anti–social elements in loan agreements used in the Captive Loan Scheme

2. Structural Enhancements
—Increase management level participation and reorganize management of divisions—

  • Establishment of the Anti–Social Elements Elimination Committee
  • Appointment of an external director to the Board of Directors at MHBK
  • Deployment of a Deputy President as the Group Chief Compliance Officer
  • Review of the Compliance Group
  • Strengthening of management reporting and contact structure regarding information on anti–social elements

3. Reforming awareness, etc.
—Improving awareness among executives and employees, and improving corporate culture—

  • Improve awareness of elimination of anti–social elements
  • Strengthen cooperation (with law enforcement agencies, legal professionals, etc.)
  • Strengthen frameworks for eliminating transactions with anti–social elements for products and services
  • Develop follow–up structures for compliance programs and business plans
  • Improve corporate culture
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