China shuts down $7.3 billion illegal forex operation

China said it has broken up an underground banking operation that conducted $7.3 billion in illegal foreign-currency transfers, trumpeting the bust as a sign of its resolve in stemming massive capital flight. The State Administration of Foreign Exchange (SAFE) said in a statement late Monday that it had investigated six companies suspected of illegal forex transfers in the southern city of Shenzhen.
An unspecified number of other firms were found to have used false documentation, fabricated trades, and other methods to funnel money out of the country, the forex regulator said. These include "ant moving" - the process of transferring large sums of money out in small portions to avoid detection. SAFE vowed that this year it would "strengthen foreign exchange market supervision and seriously attack foreign exchange violations in order to protect China's international balance of payments." "At the same time, (we) will increase policy transparency and promote financial markets' opening to the outside world."