China arrests 800 in crackdown on underground banking

2 photos
Save Story

Estimated read time: 1-2 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

BEIJING (AP) — More than 800 people have been arrested in a crackdown on unlicensed banking operations as Beijing tries to stem outflows of money from the country, the police ministry says.

More than 380 underground banks that handled transactions totaling more than 900 billion yuan ($130 billion) were broken up in the crackdown launched last year, according to the ministry.

Communist leaders allow unlicensed financing activity to support entrepreneurs but try to stop activity they say threatens the state-run banking system, supports crime or helps people violate foreign exchange controls or other regulations.

Companies and small investors began shifting billions of dollars a month out of China in late 2015, prompted by expectations the currency would decline in value. Beijing responded by stepping up scrutiny of outbound investment and banning some activities by individual investors.

The police ministry statement Sunday gave no details of what those arrested were accused of doing but complained unauthorized money transfers paid for gambling, drug trafficking and smuggling.

China's foreign exchange reserves have declined steadily over the past six months as the central bank spent an estimated $40-$60 billion a month to shore up the currency's exchange rate.

The reserves fell to a six-year low in January of $2.99 trillion, though they still are the world's biggest. That was down $992 billion from a peak of $3.99 trillion in June 2014.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Most recent Business stories

Related topics

The Associated Press


    Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the Trending 5.
    By subscribing, you acknowledge and agree to's Terms of Use and Privacy Policy.

    KSL Weather Forecast