Chinese police raid illegal banks

The banks are accused of money laundering

Chinese police say they have shut seven illegal "underground banks" accused of laundering over 14bn yuan ($1.75bn; £0.9bn) this year.

Forty-four suspects have been arrested in cases in Guangdong, Inner Mongolia, Beijing, Shanghai, Liaoning and Heilongjiang, state media reported.

A total of 58m yuan has been recovered, economic crime investigator Han Hao told the Xinhua news agency.

The Ministry of Public Security officer said money laundering had "exploded".

He said criminals were using the illegal banking operations to illicitly transfer money outside the country and to bypass regulations to buy and sell foreign currencies.

'Serious threat'

"Under the current conditions of economic globalisation, the global movement of capital and the development of high speed communications, money laundering has exploded," Mr Han said.

"Drug trafficking, smuggling, corruption, graft and other crimes are now closely interlinked and form a serious threat to our nation's political, economic and social security."

He went on to say the black market operation in Shanghai may have been responsible for laundering up to 5bn yuan in 2006 and was organised by an unnamed suspect from Singapore.

This operation was providing remittance, foreign exchange and other banking services between Singapore and China, he said.

"Our attitude in eliminating and severely cracking down on these underground banks is very clear and we will continue to exert high pressure on these activities," Mr Han said.