China will further crack down on illegal activities in the shadow banking sector as part of efforts to contain financial risks, the country's top banking authority said on Tuesday.

The China Banking and Insurance Regulatory Commission has found problems, including violations of the new asset management rules during inspections, and urged all banks and insurers to rectify the problems exposed, the commission said in an online statement.

China has stepped up efforts in recent years to regulate the shadow banking sector, often referring to activities performed by financial firms outside the formal banking sector, and therefore subject to lower levels of regulatory oversight and higher risks.

Shadow banking levels in China have fallen by 16 trillion yuan (about 2.29 trillion U.S. dollars) over the past three years, the commission said in May.

The commission will continue to strengthen oversight of the sector to maintain the progress made, it said.