Madrid - Spanish police said on Friday they had dismantled a criminal gang they believe was the largest financier of drug trafficking in Europe.

The gang, which operated out of a restaurant in an industrial park outside Madrid, is believed to have laundered about 300 million euros ($292 million) a year, police said in an emailed statement.

The criminal ring was the largest such gang in Europe, in terms of laundered funds when compared to Europol's investigations, a Spanish police spokesperson said.

In raids coordinated with Europol in several places in Spain, police officers seized more than 400,000 euros in cash and cryptocurrency accounts worth 1.5 million euros, as well as 11 luxury cars and significant quantities of cannabis, Europol said in a separate statement.

Europol said that in total police had seized nearly 3 million euros over the course of the investigation.

During coordinated raids carried out on Sept. 27 in 21 locations across Spain, including Malaga and Toledo, police arrested 32 people.

The criminal network, which mainly comprised Syrian and Colombian nationals and began operating in 2020, acted as an informal bank, providing financial services to drug trafficking gangs in more than 20 countries.

The "bank" used an informal money transfer system popular in the Middle East known as "hawala" which doesn't require the physical movement of money.

Instead, hawala dealers in different locations keep a ledger of credit and debit transactions, allowing money to be passed between traders through a handshake, a piece of paper or on trust. Police said the network also used cryptocurrencies to transfer large sums of money.

Clients would visit the restaurant in Fuenlabrada each day to collect cash that was handled by Chinese nationals based in the local area, police said.

($1 = 1.0280 euros)

(Reporting by Charlie Devereux Editing by Inti Landauro and Mark Potter)