BEIJING, July 5: China has cracked its biggest cross-border foreign exchange scam, involving more than US$40 million, and six suspects have been arrested, the China Daily said on Saturday.

The illegal transactions occurred in the city of Weihai in east China’s Shandong province, the report cited the State Administration of Foreign Exchange and the Ministry of Public Security as saying Friday.

The scam was operated by Zhao Shengxuan, who has been arrested and sentenced along with five accomplices by a local court, the report said, but it did not mention the sentences in the report.

The gang had operated a currency black market between China and South Korea since 2000, the report said.

It first changed the Chinese currency Renminbi into the South Korean won by selling Renminbi to some foreign ventures in China.

These companies’ South Korean offices sent the South Korean currency to an account established by the crime ring in South Korea.

The Korean won were changed into US dollars in South Korea and then brought into China in batches and sold at a profit, the report said.

There is a big demand for US dollars in China. Many residents want the dollars to sell to friends and acquaintances at a profit while others need the currency when they travel or study abroad.

The US dollars traded by Zhao’s group have been bought and sold in nearly 10 cities and regions including Qingdao and Yantai of Shandong province and Shenyang and Yanji of northeast China, the report said.

Authorities have uncovered a growing number of illegal foreign exchange transactions across China in recent years, according to Zhang Aidong, a senior official of the State Administration of Foreign Exchange.

Money laundering in particular has become a problem in recent years, Zhang noted. It normally involves the illicit transfer of money from China to other countries with the help of underground private banks both in China and abroad.

Since last year, Chinese police have been cooperating with their counterparts in other countries to follow up on more than 70 leads on money laundering cases, which involve about 17 countries and regions, China Daily said.

Zhang’s administration and public security departments will jointly launch a special nationwide campaign in the second half of this year to fight against underground banks, the report said.—AFP