China said it would launch a three-month crackdown on underground banking to curb money-laundering and illegal funds transfers as unstable markets stoke fears of capital flight.

Worries over China's economic slowdown and possible interest rate rises by the U.S. Federal Reserve have led to a wave of capital outflows this year.

Chinese law prohibits individuals from transferring more than $50,000 out of the country per year, but the underground banking industry has thrived in recent years as a channel to send money out of China.

"Some 'grey funds' have been transferred through underground money shops across the border, which not only poses a serious risk to our foreign exchange management but also disturbs the order of financial and capital markets and threatens our financial safety," Vice Minister Meng Qingfeng was quoted as saying on the Ministry of Public Security website.

In April, a similar campaign found 66 underground banks responsible for illegally funneling out more than 430 billion yuan ($67.5 billion), the ministry said.