Japan issues multi-agency warning on crypto use in real estate over money laundering risk

In a major development, four Japanese government bodies have jointly flagged crypto assets as a high-risk payment method in real estate transactions, warning the property industry that the technology’s cross-border transfer capabilities make it particularly susceptible to money laundering.

The joint request came from Japan’s Ministry of Land, Infrastructure, Transport and Tourism, the Financial Services Agency, the National Police Agency, and the Ministry of Finance. The notice was circulated to industry groups including the Japan Cryptocurrency Business Association and several national real estate federations.

As per the official statement, crypto assets, which have the nature of being transferred instantly across national borders, are considered to pose a high risk of being used as a payment method in real estate transactions for the purpose of money laundering.

Real estate agents handling crypto-involved transactions are now expected to meet bank-style Anti-Money Laundering standards. Under Japan’s Act on Prevention of Transfer of Criminal Proceeds, agents must conduct customer due diligence, file suspicious transaction reports with regulators, and notify police when criminal activity is suspected.

If an agent suspects a party of running an unregistered exchange business, they are required to hand that information to law enforcement. Agents who receive crypto assets directly as sellers, even in cases that fall outside the definition of exchange business activity, are still prohibited from using unregistered crypto asset exchange providers.

The notice flagged a specific legal risk around currency conversion. Agents who convert crypto to fiat on behalf of clients may be considered to be operating a crypto asset exchange business under Japan’s Payment Services Act, which requires registration. Doing so without it carries legal consequences.

Crypto asset exchange providers face their own obligations under the notice. They must rigorously verify customer identities and flag suspicious activity, with particular attention to high-value transactions that do not align with a customer’s known financial profile.

Further, the statement also highlighted Japan’s Foreign Exchange and Foreign Trade Act, reminding firms that receiving crypto assets worth more than 30 million Japanese yen, approximately $180,000, from overseas triggers a mandatory payment report filing with authorities.