Illegal money transfer and laundering are major crimes practiced worldwide. These promote corruption and destabilize the economy of vulnerable countries like China.

According to Financial Times, hundreds of money launderers, running underground banks were arrested by police in China for illicitly transferring more than 800 billion yuan ($125.34 billion) out of China into foreign currencies. After the news was revealed, Beijing has tightened its control to relieve downward pressure on the value of the renminbi and stop money diffusing out of the country.

The official mouthpiece of the ruling Communist party, People's Daily reported that since April, china's police have cracked around 170 illegal fund transfers and money laundering cases. The paper also added that illegal flooding of money out of the country have adversely affected China's foreign exchange management system and also led a  seriously disturbed "financial and capital markets order".

The article also mentioned the description of China's biggest discovered illegal money laundering case so far, which caused overseas transfer of 410 billion yuan worth of Chinese money using non-resident accounts, exploiting regulatory loopholes and bypassing oversight, as reported by Reuters.

Furthermore, after the news was revealed, China's central bank and foreign exchange regulator tend to restrict the money transferring channels to assist legal money transfer. This will help to stabilize money supply and minimize the prompt growth of domestic interest rates. The continuous change of yuan to dollars by Chinese companies and individuals will cause the short availability of yuan currency for lending and thus putting upward pressure on rates.

On Wednesday, Reuters was told by the sources that China has taken action against the trade at offshore yuan clearing banks, stepping up capital controls. Beijing is striving to include its currency in the International Monetary Fund's reserve basket and is waiting for the final result from IMF.

However, the decision of including the yuan by the IMF is set at the end of the month, as mentioned by South China Morning Post. To a bit of disappointment for Beijing, Reuters was told by IMF sources that the yuan is considerable to be included in the International Monetary Fund's reserve basket, but at a lower ratio than originally expected.

On Sunday, data showed that a net 12.9 billion yuan (US$2.02 billion) worth of foreign exchange was bought by China's central bank and commercial banks in October, staunching heavy sales in the previous three months that underlined capital outflows.