BEIJING (REUTERS) - Chinese police have this year uncovered US$30 billion (S$40 billion) worth of illegal banking activity, involving 158 cases of underground banks and money laundering, the official Xinhua news agency reported the Ministry of Public Security (MPS) as saying late on Tuesday (Aug 16).

A special task force, jointly launched by the MPS, central bank, and foreign exchange regulator, uncovered illegal banking services in 192 locations, the report said.

Beijing started a crackdown on underground banks in April last year and uncovered over 170 cases of money laundering and illegal fund transfers involving more than 800 billion yuan (S$162 billion) as of last November.

China has been dogged by reports of rogue managers of P2P - shadow banking platforms - and has been criticised by local and overseas investors for being soft on money laundering, prompting authorities to take action.

The crackdown included the investigation on the country's biggest underground banking case that handled US$64 billion worth of illegal transactions.

Although the crackdown has curbed underground banking to some extent, illegal activities using those "grey capital" networks are still spreading and becoming more elusive, the report said.

Underground banks are channels for transferring money obtained through illegal activity, including public funds embezzled by corrupt officials, it added.

"Criminal activities by underground banks are still rampant. There is increasing collusion among underground banks in different regions," Xinhua reported.