A woman taking a souvenir photo for her friend at a shopping mall in Beijing on May 22. AP Photo/Andy Wong Chinese authorities just uncovered a massive "underground bank" in the country's eastern Zhejiang province, according to a report in the People's Daily, the official Chinese Communist Party newspaper.

The scale of the operation reported is astonishing. The report suggests 410 billion yuan ($64 billion, £42 billion) in foreign-exchange transactions were made by the unnamed illegal organisation — 370 people have reportedly been arrested.

China's currency is tightly regulated by the government, so even multinational firms have struggled with large foreign-exchange deals. An underground bank effectively smuggles money in and out of China for investors.

According to Bloomberg, a man named Zhao Mouyi transferred billions of yuan through bank accounts meant for international companies, which are not usually available to Chinese citizens.

Here's a snippet from Bloomberg's report:

Zhao circumvented the capital controls by directly transferring yuan overseas and then exchanged the money into foreign currencies at banks including HSBC Holdings Plc in Hong Kong, the People's Daily said. Zhao then allegedly transferred it to his clients’ accounts, the report said, citing the local police.

The size of the bank means it makes up over half of the underground financial activities that have been identified since earlier this year.

The Chinese government is engaged in a major crackdown on corruption, which is paired with attempts to stem the flight of capital from the country. Until recently, the world was buying the yuan (or renminbi) on net, as people battled to invest in China. Now that's changing:

With Chinese growth slowing and investment opportunities elsewhere, people are trying to get money out of the country, but the strict capital controls stop that from happening through official channels. That's why the illegal or "underground" banks crop up.