China has cracked its biggest cross-border foreign exchange scam, involving more than US$40 million, it was announced Friday.

The illegal transactions occurred in the city of Weihai in East China's Shandong Province, China's Central Television (CCTV) quoted the State Administration of Foreign Exchange and the Ministry of Public Security as saying.

Ringleader Zhao Shengxuan and five other accomplices have been tried and sentenced by a local court.

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

First, they changed the Chinese currency Renminbi into 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.

These Korea won were changed into US dollars in South Korea and then brought into China in batches and sold at a profit.

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, and Shenyang and Yanji of Northeast China.

A growing number of illegal foreign exchange transactions across China's borders have been exposed in recent years, according to Zhang Aidong, a senior official of the State Administration of Foreign Exchange.

The illegal money involved is probably used for smuggling activities, drug trafficking or other illegal activities, Zhang noted.

Zhang's administration and the Ministry of Public Security have jointly decided to strengthen controls over cross-border foreign exchange markets in the future.

Money laundering in particular has become a problem in recent years, Zhang noted.

Since 2002, Chinese public security departments have co-operated with their counterparts in other nations to follow up more than 70 leads on money laundering cases which involve about 17 countries and regions.

Money laundering normally involves the illicit transfer of money from China to other countries with the help of underground private banks both in China and abroad.

Zhang's administration and public security departments will jointly launch a special nationwide campaign in the second half of this year to fight against the underground banks.

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