Italian police on Tuesday seized 70 Chinese-owned businesses in the textile sector in and around Florence and assets worth 25 million euros in an anti-fraud crackdown.

The operation in central Italy was "a dam on the flow of money from Italy to China", financial police said in a statement, adding that the alleged crimes included fraudulent money transfers and the creation of shell companies.

Police said they have seized 396 bank accounts, 183 vehicles and 76 properties. A total of 500 officers were involved in the operation codenamed "Cian Ba" meaning "river dam" in Chinese and there were raids across Italy.

"Chinese companies operating in the ready-to-wear sector in Prato and leather goods in Florence were accumulating large amounts of cash thanks to black market sales often using counterfeit goods and illegal labour," it said.

The investigation found that business owners were then sending the cash back to China through money transfer agencies in dozens or even hundreds of tranches of 1,999.99 euros each -- under the legal limit per payment of 2,000 euros.

The police said it estimated that 238 million euros (342 million dollars) in revenue were not declared in Italy this way and sent back to China between 2007 and 2009.

"The Chinese government always asks Chinese citizens resident in Italy to integrate better into society and calls for them to respect local laws, customs and traditions," the Chinese embassy to Rome said in a statement.

"We hope that the legitimate rights of Chinese immigrants are protected and guaranteed during these operations," it added.

The main Chinese hub in Italy is Prato where tensions are high between local authorities and the estimated 3,400 small Chinese businesses that have mushroomed there, producing clothes for major brands including Zara and H&M.

Police say the town has become a new Chinese gangland but immigrants defend it as a revitalised hub of Italy's flagging textile industry.

Chinese immigrants began arriving in Prato some 20 years ago, initially working for Italian companies before setting up their own businesses.

There are now officially some 17,000 Chinese residents -- up to 50,000 including undocumented migrants -- out of a population of 188,000 in Prato.

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