I prefer her without a mouth, but this is an artists impression of what it might look like IF she had a mouth. Not sure I like it that much, I guess I prefer the silent types!

It is amazing how one can smuggle billions of dollars from China into Hong Kong, illegally so that people from China can move their money outside, how much of this has been fueling Hong Kong’s stock market?

CCTV reported that Guangdong authorities had shut down an underground bank in Shenzhen run by a Hong Kong woman, which over the past 18 months had handled at least 4.3 billion yuan. It said the bank had operated out of a Shenzhen flat for at least seven years, with clients in 31 provinces and cities.

The Shenzhen branch of the People’s Bank of China told banks to limit withdrawals over-the-counter and from automated teller machines to stem the billions of illicit yuan being pumped into the Hong Kong market, the China Securities Journal reported on Thursday.

CCTV said a 43-year-old Hong Kong woman, To Ling, ran the money exchange business, with turnover reaching 1.5 billion yuan in the first five months of the year.

At least 235 million yuan was wired into the Hong Kong stock and property markets through To’s operation over the past year, the state-run broadcaster reported.

The report said To needed just three minutes to finish a deal, and almost all the money was moved through internet banking services. Among her clients were retail investors, owners of small companies and even officials from state-owned enterprises.

"To was a very shrewd and careful woman," a spokesman at the State Administration of Foreign Exchange in Shenzhen was quoted as saying. "She only served frequent customers and never dealt with strangers."

The crackdown on illicit funds from Shenzhen adds to investor fears the Hong Kong market’s bull run is coming to an end.

The Hang Seng lost 1,136.78 points to close at 27,614.43, ending the week down 4.1 per cent. The H-share index slid 747.73 points, or 4.28 per cent, to 16,737.73. Also weighing on markets were concerns the US subprime crisis is worsening and that the mainland will raise interest rates.

Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority, said it was understandable that Shenzhen lenders limited their customers’ cash withdrawals as they had the responsibility to combat money laundering and financial activities channelled through underground avenues. However, after a meeting with central bank officials yesterday, Mr Yam denied it was a PBOC policy to curb capital flows seeking to punt on Hong Kong stocks.

A Security Bureau spokeswoman in Hong Kong said all remittance agents and money changers were required to register with the police. In order to combat money laundering, they must also verify a customer’s identity and keep records of transactions above HK$8,000.

Financial analysts said the crackdown wouldn’t stop mainlanders wiring money through illegal channels and reflected the mainland’s immature financial system.

"Lack of investment products, low interest rates and the price gap between mainland-traded A shares and H shares should be blamed for the rampant underground money flows from the mainland," said Stephen Tsui, director of Hong Kong-based Taiwan Concord Capital Securities.

Yi Xianrong , an economist with the Chinese Academy of Social Sciences, said underground money remittance would be stopped only when Beijing lifted its foreign currency limitations and let the yuan integrate into the world economy.