'Tourist photo studio' smuggled $237M crypto out of China for real estate

The operation allegedly hid deals from China's government via crypto, noticeably in the wake of Xi Jinping’s “common prosperity” drive.

Wealthy Chinese investors have used cryptocurrency to cover up multi-million-dollar real estate deals in Japan, tax authorities in Tokyo have discovered.

According to Japanese daily the Asahi Shimbun, three individuals based in China plowed around 27 billion yen ($237 million) into real estate across the country via crypto, over three years until March 2019, using a tourist photo studio as a front.

The trio was reportedly working on behalf of loaded Chinese clients who wanted to make inroads into the Japanese real estate market.

Sources say the setup, which saw large amounts of crypto sent to the “tourist photo studio,” converted digital assets to yen.

The operation was allegedly intended to hide these deals from the Chinese government in the wake of president Xi Jinping’s “common prosperity” drive.

The common prosperity campaign proposes using taxation and “wealth distribution” to bridge the country’s wealth gap. But Xi’s Maoist rhetoric has many of China’s wealthiest citizens spooked.

As a result, many Chinese investors have been looking for new ways to move their funds to safer climes.

However, this particular scheme came crashing down when tax officials noticed huge amounts of money entering and leaving the company’s accounts, despite it boasting annual sales of just 10 million yen (around $88,000).

Chinese law states that any individual wishing to transfer more than $50,000 abroad in a single year needs express permission from Beijing.

Not only that, The Asahi Shimbun also reports that lawyers consider Beijing highly unlikely to grant approval for transfers destined for investment in foreign real estate.

Cooperation key for Japan and China’s crypto police

According to experts in Tokyo, China and Japan need to be on the same page if they are to successfully dodgy crypto transactions.

Nobuhiro Tsunoda, a retired National Tax Agency official who is now chairman of Ernst and Young Tax Co. in Japan, said via The Asahi Shimbun:

“The latest case shows there is a need to cooperate with Chinese tax authorities to thoroughly unravel the flow of funds, clarify the problems involved in such transactions and implement measures to deal with the problems.”