Chinese police have uncovered seven large underground banks in the country this year, involving money laundering of more than 14 billion yuan (about 1.75 billion U.S. dollars).

Forty-four suspects have been arrested in Guangdong, Shanghai, Beijing, Inner Mongolia, Liaoning and Heilongjiang, and 58 million yuan has been seized or frozen, said Han Hao, deputy director of the economic crime investigation department of the Ministry of Public Security on Tuesday.

Authorities in the business hub of Shanghai have broken a five billion yuan (633 million U.S. dollars) money laundering case, according to Han.

A suspect from Singapore and three other suspects have been arrested. The Singaporean is accused of operating an underground bank in Shanghai, making remittances, providing foreign exchange and other banking services between Singapore and China. The operation was active in 25 large and medium sized cities in China, Han said.

"Money laundering crimes are mainly conducted through financial system, underground banks, online banks, cash smuggling, investment, international trade and security and future market," Han said.

He said, "The fight against money laundering will help control other crimes closely connected with it, such as organized crimes, drug trafficking, terrorist activities, smuggling, corruption and financial frauds."

But he didn't give the exact figure on how much money was laundered in China every year.

Cai Yilian, deputy director of the anti-money laundering bureau of People's Bank of China (PBOC), or central bank, said, "We haven't had all the statistics, since the anti-money laundering work started very late in China."

According to some international organizations, including the International Monetary Fund, money laundering accounts for 3 to 5 percent of GDP, Cai mentioned.

Anti-money laundering has been given increasing attention by Chinese authorities. In October this year, the national legislative body adopted the country's first anti-money laundering law, which expanded the definition of money laundering to include corruption and bribery, and gave the central bank greater power in investigations.

The law is expected to come into effect on Jan. 1, 2007.

The law demands financial and some non-financial institutions to maintain record on clients and transaction records, and to report large and suspected transactions.

They are also empowered to freeze capital for 48 hours, so as to prevent corrupt officials from shifting their illicit gains, Cai noted.

"Previously we are only allowed to hand over the clues to police departments, which then have the authority to block money flows," Cai said.

PBOC is the nerve center of the anti-money laundering campaign. Its provincial branch offices are authorized to investigate suspected fund transfers of financial institutions.

According to the China Anti-Money Laundering Monitoring and Analysis Center, an office under the central bank set up in 2004, 683 suspicious money laundering cases has been reported to the police by the end of 2005. They involved 137.8 billion yuan (17.2 billion US dollars) and over 1 billion US dollars.

China is also increasing professional training of agents to fight money laundering. The Ministry of Public Security and the People's Bank of China have jointly held training classes and seminars to raise the awareness of the criminal activity.

Next year, the ministry will further cooperate with the bank to amend and improve regulations on the transfer of evidence and suspicious cash deals, Han said.

China has actively participated in international cooperation against money laundering by exchanging information, tracing illegal money transactions, researching effective countermeasures as well as offering police services and training programs, he said.

Since 2002, China has helped foreign police investigate or solve more than 400 money laundering cases.

Meanwhile, international assistance has also greatly facilitated Chinese police to dig out culprits.

"In recent years, police departments have frequently detected illegal earnings transferred to Hong Kong and Macao in some smuggling, financial fraud and tax-related cases," Han said.

He listed the notorious smuggling operation by the Yuanhua Group uncovered in coastal Xiamen City, east China's Fujian Province, and the corruption case involving three bank heads in Kaiping City, south China's Guangdong Province.

Both of the cases involved huge-sum of illicit money transferred abroad from Hong Kong, which has maintained close cooperation with the mainland in fighting money laundering and other economic crimes and later provided important evidence in solving these cases, Han said.

Three former heads of the Bank of China Kaiping branch were found to take the advantage of their post in their serve terms and diverted a total of almost 600 million US dollars they embezzled to the United States through Hong Kong's underground banks.

Yu Zhendong, one of the former bank heads, fled to the United States but was extradited in 2004, which was hailed as a large step forward in judicial cooperation between the two sides.

Earlier this year, a court in Guangdong sentenced Yu to 12 years in prison for defalcation.