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Crackdown on Illegal Foreign Exchange Dealing
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Underground trading networks have been paralyzed following a crackdown on illegal foreign exchange transactions in several cities including Beijing and Shanghai, according to the Ministry of Public Security.


A ministry statement issued yesterday said 47 underground foreign exchange marketplaces in control of at least 10 billion yuan (US$1.25 billion) had been smashed.


Money seized on the spot totaled 31 million yuan (US$3.8 million) and more than 2,000 suspicious bank accounts holding 170 million yuan (US$21 million) were closed.  


The statement said the crackdowns paralyzed the illegal networks in at least 14 cities including Beijing, Shanghai, Shenyang and Dandong in northeast China's Liaoning Province and in Shenzhen and Guangzhou in south China's Guangdong Province.


In Beijing the proper order of foreign exchange trade had returned, said the ministry. Last year police broke up three gangs, arresting 41 people and confiscating or freezing the equivalent of 28 million yuan (US$3.5 million).


In Shanghai, officers cracked the city's first case of criminals using favorable policies to establish foreign enterprises with capital from "underground banks."


It’s thought five underground trading marketplaces were rooted out in the city with an equivalent of 47 million yuan (US$5.8 million) confiscated or frozen. About 25 suspects were arrested, the ministry said.


And in Shenyang, the provincial capital of Liaoning, police cracked the largest case of illegal trading in the Korean won. Three underground marketplaces were broken up with an equivalent of 4 million yuan (US$494,000) confiscated or frozen.


Illegal dealing in foreign currencies had been on the increase in recent years in China and, "seriously harmed the country's economic security and normal order of foreign exchange transactions,” the ministry statement added.


They emphasized that Chinese law strictly prohibited illegal foreign exchange dealing and that further crackdowns would follow.  


(China Daily April 21, 2006)

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