China busts underground bank in Guangzhou: Report

China is cracking down on underground banks and other foreign exchange violations in a bid to "prevent and resolve risks from cross-border capital flows" and bolster the yuan.
China is cracking down on underground banks and other foreign exchange violations in a bid to "prevent and resolve risks from cross-border capital flows" and bolster the yuan. PHOTO: ST GRAPHICS

SHANGHAI (REUTERS) - Chinese police have broken up a secret banking operation used to transfer assets abroad, the official China Daily reported on Tuesday (Sept 26).

The underground bank, hidden in a food market in the southern city of Guangzhou, is suspected of being involved in cross-border transactions worth more than US$70 million (S$94 million) in the past month alone, the paper said, citing a statement from Guangzhou's public security bureau.

China is cracking down on underground banks and other foreign exchange violations in a bid to "prevent and resolve risks from cross-border capital flows" and bolster the yuan, the country's forex regulator said in July.

Last year, Chinese police busted more than 380 underground banks, involving more than 900 billion yuan (S$184 billion), and arrested more than 800 suspects, according to the Ministry of Public Security.

Guangdong province busted three large underground banks earlier this year involving cross-border transactions worth 3 billion yuan and resulting in the detention of 30 suspects, China Daily said.