HONG KONG - Hong Kong seized a record amount of illicit funds last year, officials said Tuesday, after the United States warned the free-wheeling financial hub was becoming a haven for money laundering.

The Chinese territory's police and customs department said they seized HK$150 million ($24.6 million) in cash linked to criminal activities in 2010, double their haul in 2009, amid a surge in suspicious banking transactions.

Last year, the US Central Intelligence Agency warned that Hong Kong's banking system "provides a conduit for money laundering", including funds derived from heroin and methamphetamine trafficking.

The latest government figures showed a 17 percent rise in the number of people convicted of money laundering in Hong Kong last year, from 307 in 2009 to 360 last year.

Steve Vickers, the city's former senior superintendent of police, warned that criminals and extremist groups could take advantage of Hong Kong's loosely regulated economy, including its lack of currency controls.

"It is a cat and mouse game," Vickers, now head of the International Risk consultancy, told AFP.

"When you have an open economy, it is easy for money launderers to exploit the system," he added.

Hong Kong has introduced new legislation to combat money laundering and terrorist financing, which is expected to come into force by April next year if the bill is passed by legislators.

The draft legislation comes after Hong Kong was criticised by the Financial Action Task Force, an anti-money laundering organisation set up by the G7 group of rich nations.

Last month, Hong Kong also said it would beef up legislation that would allow it to seize assets of local businesses linked to Iran's weapons buildup, which is in defiance of UN sanctions.