Written down and in practice, this is a good system. However, after the 1 month period unofficial gangs are going to become irrelevant once the better roleplay gangs are accepted. The current system gives anybody the chance to have a stab in the criminal faction life in terms of recruitment and actual beef. We can see new gangs rising and participating almost every single day. This current system encourages those to work their way up to become "recognized" rather than official with an application. You can see this as of recently with the newish gangs... Vagos, Los Zetas, The Gates, etc. Unofficial gangs will become irrelevant without server sided support after this one month period.
I've seen it fail before but I'm hopeful it'll work.