Shanghai police broke up an illegal banking network recently that involved 2 billion yuan ($314 million), local public security authorities said on Sunday.

The main suspect, identified only as Ge, 41, is accused of illegally making 2 million yuan in two years before he was detained, China Central Television reported, citing police.

The underground banking network had more than 20 accounts in Shanghai and Zhejiang, Jiangsu and Guangdong provinces, according to investigators from the economic crime investigation division of the Shanghai Public Security Bureau.

Ge, a Shanghai resident, had worked in a foreign bank for 15 years and accumulated clients in foreign trade, police said.

In 2010, he is alleged to have developed an illegal foreign exchange network, China National Radio reported.

Most of his clients are believed to have been mid-sized private trade companies that sought to illicitly convert foreign currency to RMB to evade taxes, according to China National Radio.

Police said they accidentally found out about the misdeeds while investigating another illegal banking case in December.

With cooperation from authorities in Zhejiang, Jiangsu and Guangdong, Shanghai police detained more than 20 people, including Ge, and froze the bank accounts, CCTV reported.

Underground banks are used mostly for money laundering and other illegal economic activities.

China's first law targeting money laundering took effect on Jan 1, 2007. The law demands financial and nonfinancial institutions to keep their clients' identity information and transaction records, and report large and suspect transactions.

Underground banking operations have disrupted China's foreign exchange management system and harmed the development of its banks, said Xia Weidong, deputy chief of the economic crime investigation division of Shanghai Public Security Bureau.

Since March, more than 240,000 economic crime cases have been filed and more than 140,000 suspects had been detained or prosecuted nationwide.

jinhaixing@chinadaily.com.cn