Financial Conduct Authority
The FCA has issued a deadline to British banks to disclose any involvement in the Panama Papers leaksReuters/Chris Helgren

A number of British banks and financial institutions have been given a deadline by the Financial Conduct Authority (FCA) to reveal whether they have conducted business with Mossack Fonseca, the law firm involved in the biggest data leak in history.

The firm, which is at the epicentre of the so-called Panama Papers leak, is understood to have been contacted by more than 500 banks across the world to set up some 15,600 offshore companies, which could have allowed clients to avoid taxes.

In its letter, which was addressed to approximately 20 firms, the financial watchdog urged banks and financial institutions to carry out internal investigations into the Panama Papers leaks and to report back by next week.

"Beyond April 15 we will require updates on any significant issues or relationships identified and a full response, detailing findings, when your investigation is concluded," the letter reads.

The FCA also reminded British lenders than any subsidiaries or branches not based in Britain remained subject to UK legislation in terms of monitoring their clients' accounts.

The regulator, whose letter was written on Tuesday (5 April) but made public by the Financial Times only on Thursday, added it was collaborating with a number of agencies to ensure no wrongdoing has taken place.

"As part of our responsibility to ensure the integrity of the UK financial markets we require all authorised firms to have systems and controls in place to mitigate the risk that they might be used to commit financial crime," the statement said.

"We have also today [Tuesday] published our annual Business Plan which identifies financial crime and anti-money laundering activity as one of our priorities for the year."

Earlier this week, HSBC and Royal Bank of Scotland-owned Coutts were alleged to be among the banks mentioned in the leaks. However, both lenders swiftly refused any accusations of wrongdoing and added they were working closely with the authorities to fight money laundering practices.

Mossack Fonseca director Ramon Fonseca has denied any wrongdoing. He said the firm had suffered a hack on its database and described the leak as "an international campaign against privacy", according to Reuters.