BEIJING (REUTERS) - Beijing police have shut down more than 10 "underground banks" responsible for illegally funnelling more than US$22.6 billion (S$29.4 billion) out of China, the official Xinhua news agency reported on Friday.

Police arrested 59 suspects, froze 264 bank accounts and seized more than 800 bank cards after raiding locations in central Beijing, according to the report.

Police said suspects operating out of their private homes had borrowed, rented or purchased bank accounts to buy US$50,000 in foreign exchange with each account.

Chinese law prohibits individuals from transferring more than US$50,000 out of the country per year, but a money-laundering industry has thrived in recent years to help wealthy Chinese do just that - while authorities have struggled to keep up.

On casino floors in Macau, for instance, an increasingly popular scheme involves using the government-supported payment card network, China UnionPay, to make fake purchases.

In July, state broadcaster China Central Television aired an undercover investigation accusing state-owned Bank of China of illegally spiriting unlimited amounts of money abroad for clients.

The bank denied the accusations, saying it was offering a legitimate service to help Chinese individuals invest overseas and boost the international popularity of the yuan.