Japan’s financial, law enforcement and real estate regulators have issued a joint guidance request warning that crypto assets pose money laundering risk in property transactions.
The request, published on Tuesday, was issued by the Ministry of Land, Infrastructure, Transport and Tourism, the Financial Services Agency, the National Police Agency and the Ministry of Finance. It was addressed to major real estate and crypto industry bodies, including the Japan Cryptocurrency Business Association and several national real estate federations.
“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,” the request states.
Japan sends request regarding crypto usage in property deals. Source: FSA
The multi-agency request instructed real estate agents to conduct customer due diligence on any crypto-involved transaction under Japan’s Act on Prevention of Transfer of Criminal Proceeds, file suspicious transaction reports with regulators and notify police when criminal activity is suspected, bringing bank-style Anti-Money Laundering (AML) expectations into crypto property deals.
Related: Japan approves bill to classify crypto as financial instruments
Japan warns against unregistered crypto in property deals
The request warned that converting crypto to fiat on behalf of clients may constitute “crypto asset exchange business” under the Payment Services Act, an activity that requires registration and carries legal risk if conducted without it.
It also asked crypto exchanges to watch for cases where a customer receives property sale proceeds in crypto and then attempts unusually large transactions that don’t match their financial background.
Furthermore, the document reminded firms that under Japan’s Foreign Exchange and Foreign Trade Act, anyone receiving crypto worth more than 30 million Japanese yen (approximately $180,000) from overseas must file a payment report with authorities.
Related: Japan to test government bonds as digital collateral on Canton
Japan classifies crypto as financial instrument
Earlier this month, Japan amended its Financial Instruments and Exchange Act to classify crypto assets as financial instruments, moving them out of the payments category and into the same regulatory framework as traditional securities.
The change bans insider trading and other market manipulation involving undisclosed information, and requires crypto issuers to publish annual disclosures. Penalties for unregistered crypto exchanges have also been stiffened under the amendment, while the government separately backed plans late last year to cap the tax rate on crypto profits at a flat 20%.
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