Spanish police on Wednesday searched the Madrid branch of China's biggest lender ICBC and arrested five of its directors as part of a probe into the suspected laundering of at least 40 million euros ($44.5 million).

The bank is suspected of allowing funds earned through the alleged crimes of smuggling, tax fraud and labour exploitation to be transferred "to China in a way that appeared legal", police said in a statement.

Police arrested five directors of the branch during the search, the EU police agency Europol, which supported Spanish authorities in their investigation, said in a separate statement.

Two armed police in green uniforms guarded the entrance of the branch located on the leafy Paseo de Recoletos, a wide boulevard in the centre of Madrid, as a crowd of journalists looked on.

Spanish police said the raid was a follow-up to a an operation carried out last year that targeted Chinese gangs based in Madrid, suspected of importing huge amounts of goods from China without declaring them on customs forms, to avoid import and tax duties.

The crime groups allegedly deposited the money earned into ICBC, which is accused of sending the funds to China without checking their origin as required by law.

One of the crime groups that was broken up last year is suspected of having laundered "an amount known to be as of the moment 40 million euros" in the branch, the police statement said.

Police detained dozens of people as part of the operation against the groups last year and broke up several illegal sweatshops where Chinese immigrants worked.

Europol said Spanish investigators then uncovered other Chinese and Spanish crime groups that are suspected of also using the services of ICBC in Spain to launder money earned through illegal activities.

The agency said it deployed a unit to Madrid to assist Spanish authorities with intelligence which found signs that the alleged money laundering had links to activities in France, Germany and Lithuania.

- 'Complex corporate structures' -

The head of Europol's financial intelligence group, Igor Angelini, said the operation "shows all the challenges that modern transnational financial investigations entail."

"Criminal activities generate cash which is then injected into the financial system through the misuse of complex corporate structures. The complicity of several professionals who move the funds across different jurisdictions completes the picture," he added.

Economy Minister Luis de Guindos said the government and Spain's money laundering watchdog, SEPBLAC, would do all it could to help the investigation into ICBC.

"If there is any type of need of cooperation with judicial or police authorities, we will provide it, as we always do and as and as SEPBLAC always does," he told reporters when asked about the search of ICBC.

The police statement said a judge in Parla, a southern Madrid suburb where many of the Chinese store wholesalers are located, had ordered the search of the branch.

ICBC is the world's largest bank by market capitalisation. It entered the Spanish market in January 2011 with the inauguration of its branch in Madrid. A year later it opened a second branch in Barcelona.

The Chinese lender's foreign operations accounted for about 10 percent of its total assets at the end of last year.

Just over 191,000 Chinese nationals legally live in Spain, making the Chinese immigrant population the fourth largest foreign community in the country, according to national statistics institute INE.