BEIJING - CHINA has jailed five people for their part in running an illegal currency exchange business that handled billions of yuan in swaps between Hong Kong and the country's south, state media reported on Saturday.

The business, based in Shenzhen, with branches in neighbouring Hong Kong and Guangzhou, capital of southern Guangdong province, had handled more than 4.3 billion yuan (S$1.02 billion) in money transfers between 2006 and May this year, the China Daily said.

'It helped overseas clients exchange their currencies into Hong Kong dollars, which would be then converted into yuan and sent to the mainland,' the paper said.

The five were handed sentences ranging between 16 to 24 months and fined between 5,000 and 20,000 yuan for running the Guangzhou branch and illegally transferring more than 2.2 billion yuan, the paper said.

The mastermind of the operation, a Hong Kong resident originally from Guangdong, was still awaiting trial.

Beijing has pledged to crack down harder on illegal capital flows between Hong Kong and the country's south, which stem in part from China's restrictions on currency conversion.

Chinese Premier Wen Jiabao last year warned that illegal fund flows could harm the country's financial stability. -- REUTERS

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