The US government Thursday hailed the smashing of a major counterfeit currency operation in Malaysia by local police helped by the US Secret Service.

More than two million dollars in false US currency were believed to have been seized in the operation Tuesday, the US embassy said here in a statement.

"The US government is impressed with the diligence and investigative skills of the Malaysian police officers who took the lead in this case and helped stop a major counterfeit ring before it could cause damage to the economic and political security of countries affected," the statement said.

Police were tightlipped about the case but The Star newspaper said two suspects, including the owner of a printing press company, had been arrested.

The paper quoted sources as saying police had seized more than 15,000 fake US$100 notes, more than 6,000 incomplete US$100 notes and about two million fake yen.

Also confiscated were thousands of counterfeit travellers' cheques - more than 8,000 cheques for 100 pounds and more than 2,500 for US$100.

All the notes were neatly stacked in boxed in a house in a suburb outside Kuala Lumpur.

Police told the daily they were checking with their counterparts in neighbouring countries to determine whether the Malaysian ring had links with other syndicates in the region. — AFP