- Several Japanese government agencies and regulators have jointly issued a guidance request warning that real estate transactions involving crypto may pose a heightened risk of money laundering.
- The guidance highlighted that crypto’s almost instant processing and settlement of cross-border transfers was a significant source of risk.
- Japanese real estate and crypto industries were instructed in the guidance to take additional precautions when dealing with property transactions involving cryptocurrencies.
Japan’s real estate and cryptocurrency industries have been warned that digital assets pose a money laundering risk when used in real estate transactions in a new joint guidance notice issued by the nation’s government agencies and regulators.
The warning was published Tuesday, April 28, by Japan’s 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 Japanese real estate and crypto industry bodies, including the Japan Cryptocurrency Business Association.
The guidance request singled out crypto’s speed of processing and settling cross-border payments as a significant source of the money laundering risk.
“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 read.
Real estate agents were asked to take precautions when dealing with property transactions involving crypto, including conducting due diligence in accordance with requirements laid out in Japan’s Act on Prevention of Transfer of Criminal Proceeds, filing regulatory reports on suspicious transactions, and notifying the police of suspected criminal activity.
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The guidance also cautioned real estate agents that converting cryptocurrency to fiat currency on behalf of their clients could legally constitute the operation of an unlicensed crypto exchange under the Payment Services Act, which may result in legal penalties.
Additionally, it reminded companies that anyone receiving over 30 million yen (around AU$250,000) from overseas has a legal obligation to declare the payment to the relevant authorities under Japan’s Foreign Exchange and Foreign Trade Act.
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Earlier this month, the Japanese government amended its Financial Instruments and Exchange Act to reclassify cryptocurrencies as financial instruments, tightening regulation to outlaw insider trading and market manipulation in crypto and increasing disclosure requirements for crypto firms. Previously, crypto had been regulated as a form of payment in Japan.
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