China breaks up $64 billion underground banking network

Shanghai: China says it has cracked its biggest-ever underground banking network, which handled 410 billion yuan (USD 64 billion) in illegal foreign exchange transactions.

The bust, reported Friday by state media, comes as Beijing struggles to stem illicit capital outflows.

The People's Daily newspaper said more than 370 people were detained and punished in the case. It said Chinese authorities uncovered over 800 billion yuan (USD 126 billion) worth of underground banking and money laundering since April.

China has tight currency controls which limit individuals to converting USD 50,000 in currency a year, but they are widely evaded.

Officials say China's underground banking problem is getting "increasingly severe." They worry such networks are used by corrupt officials, criminals and terrorists to launder money, and say massive unofficial outflows wreak havoc with China's financial management.