Beijing police bust huge 'underground banks'

The Beijing Police said on Friday that they had busted over ten "underground banks", which were used to illegally trade foreign currency and transfer money across borders.

The cases involved nearly 140 billion yuan (about 22.6 billion U.S. dollars), the police said.

More than 400 police in September were dispatched to undertake the operation, which resulted in the arrest of 59 suspects; the seizure of over 800 bank cards and more than 100 Internet banking digital certificates; and the freezing of 264 bank accounts.

A man surnamed Yao initially came under the police's radar in February. Every transaction involved the exchange of yuan equal to 50,000 U.S. dollars, the maximum limit an individual can purchase within the country annually. He had used various bank accounts to send the money abroad.

Over the past year, he transferred more than five million U.S. dollars overseas.

The police dug out "underground banks" hidden in the districts of Chaoyang, Dongcheng and Xicheng in Beijing. Through this breakthrough, illegal trading procedures, capital flow, business networks and other shady activities were uncovered.

The suspects transferred money online or by cellphone rather than trading in cash. They often operated business from their own homes and borrowed, rented or bought others' bank accounts.

"Underground banks", which run without financial supervision, not only threaten the economy and financial security, but also encourage smuggling, money laundering and state assets embezzlement, said a spokesman for the Beijing Police.

Further investigation is underway.