Japan’s financial and enforcement authorities have moved to tighten oversight of crypto use in real estate deals, warning that such transactions carry a high money laundering risk.
According to a joint request issued by Japan’s Ministry of Land, Infrastructure, Transport and Tourism, the Financial Services Agency, the National Police Agency, and the Ministry of Finance, crypto assets can be rapidly transferred across borders, a feature the agencies say makes them vulnerable to misuse in property payments tied to illicit activity.
The notice was circulated to industry groups, 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 agencies stated in the document.
Real estate agents face bank-style AML checks
Under the guidance, authorities have instructed real estate agents to apply customer due diligence in any transaction involving crypto, aligning their obligations with requirements under Japan’s Act on Prevention of Transfer of Criminal Proceeds.
The same request directs firms to file suspicious transaction reports with regulators and alert police when potential criminal activity is identified, extending anti-money laundering expectations typically applied to banks into property transactions.
Legal risk also extends to intermediaries handling crypto conversions.
The agencies warned that converting digital assets into fiat on behalf of clients could fall under “crypto asset exchange business” as defined by Japan’s Payment Services Act, meaning such activity would require formal registration.
Further, authorities have asked trading platforms to monitor cases where individuals receive proceeds from property sales in crypto and then attempt large transfers that appear inconsistent with their financial profile.
Separate reporting obligations have been reiterated under Japan’s Foreign Exchange and Foreign Trade Act.
The agencies noted that any individual receiving crypto valued above 30 million yen, roughly $180,000, from overseas must file a payment report with authorities.
Regulatory push aligns with financial system overhaul
Earlier changes to Japan’s legal framework have placed crypto assets under the same regulatory umbrella as traditional securities.
Amendments to the Financial Instruments and Exchange Act now classify digital assets as financial instruments, introducing rules that prohibit insider trading and require issuers to publish annual disclosures.
Penalties for operating unregistered exchanges have also been tightened under the updated law.
Japan greenlights blockchain use
Regulatory scrutiny has grown alongside Japan’s push to integrate blockchain into core financial infrastructure.
In April, the Japan Securities Clearing Corporation, part of Japan Exchange Group, began testing whether Japanese Government Bonds could function as digital collateral on blockchain systems, working with institutions such as Mizuho Financial Group, Nomura Holdings, and Digital Asset on the Canton Network.
The trial, selected by the Financial Services Agency under its FinTech PoC Hub, is examining whether bonds can move on-chain while maintaining legal recognition under existing laws.
At the policy level, Bank of Japan Governor Kazuo Ueda said during FIN/SUM 2026 that blockchain has entered its implementation phase, with applications in settlement, payments, and cross-border finance becoming increasingly active.
He noted that central bank frameworks would need to anchor trust as digital infrastructure expands, while also highlighting the role of AI in analysing blockchain data for AML and compliance purposes.
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