BEIJING — Chinese police say they have broken up a gang that smuggled 20 billion yuan, or $3 billion, out of the country, evading financial controls imposed by Beijing to stem an outflow of capital from the economy.

Seven suspects were detained in the case centered in the southern city Shaoguan near Hong Kong but as many as 10,000 people might have been involved, the official Xinhua News Agency reported.

Chinese authorities have steadily tightened foreign-exchange controls to stem a multibillion-dollar outflow of capital that they say hampers financial management in the world’s second-largest economy.

The group in Shaoguan is accused of moving money illegally using 148 bank accounts opened in 20 provinces with stolen identity cards, according to Xinhua. It said they made unspecified “huge profits” by trading on the difference in exchange rates between Hong Kong dollars and the mainland’s yuan.

Beijing allowed an informal financial industry to flourish over the past two decades to support entrepreneurs but is tightening controls due to mounting concern about financial stability.

Regulators are especially worried about unauthorized cross-border movement of money at a time when they are trying to stem an outflow of capital.

Companies and investors rushed to export money after a change in the mechanism used to set the government-controlled exchange rate in 2015 prompted expectations the yuan would weaken in value.

That forced the Chinese central bank to spend heavily to shore up the yuan. Regulators meanwhile tightened controls on outflows and stepped up scrutiny of proposed investments abroad, prompting some people to turn to underground operations.

“Fees charged are low, remittances are fast and unlimited and the source of funds is not questioned,” said the newspaper Guangzhou Daily in a report on the Shaoguan case. “Compared with banks and other legitimate financial institutions, underground banks are seductive.” — (AP)

In 2015, police in Jinhua, a city south of Shanghai, reported breaking up an operation that handled unauthorized foreign exchange transactions totaling $64 billion. They said more than 370 people were prosecuted or reprimanded. —

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