The Treasury has asked UK regulators to investigate whether banks HSBC Holdings PLC (LON:HSBA) and Standard Chartered PLC (LON:STAN) are linked to a South Africa corruption scandal.
Labour cabinet minister Peter Hain has written a letter to Chancellor Philip Hammond, saying a whistleblower had indicated the lenders "maybe inadvertently have been conduits for the corrupt proceeds of money”, the BBC reported.
The letter has been referred to the Financial Conduct Authority and the Serious Fraud Office to review.
Hain told the House of Lords that up to £400mln of illicit funds may have been moved by the banks.
South Africa corruption inquiry
The FCA and the SFO have been asked to review whether the banks are linked to South Africa’s corruption inquiry into alleged ties between President Jacob Zuma and wealthy business family, the Guptas.
The Guptas are accused of buying influence in government to benefit the family financially.
Zuma and the Guptas have denied any wrongdoing but leaked emails and official investigations have fuelled the allegations.
The scandal has already ruined UK public relations firm Bell Pottinger, which counted Gupta holding company Oakbay Investments as a client. It saw its business collapse when it was struck off by the UK PR industry body for its work with Oakbay.
HSBC and Standard Chartered asked to review transactions
Hain said banks, including HSBC and Standard Chartered, should review transactions involving individuals and companies linked to the Gupta family.
He urged UK authorities "to track that stolen money down and make sure that British financial institutions help return it to South African taxpayers".
Hain said whistleblowers told him that the money was taken out of South Africa via Hong Kong and Dubai.
FCA in contact with banks
A Treasury spokesperson said: “We take allegations of financial misconduct very seriously, and have passed Lord Hain's letter on to the Financial Conduct Authority and relevant UK law enforcement agencies, including the National Crime Agency and Serious Fraud Office, to agree the right action."
The FCA said it was also in contact with the banks named by Lord Hain and would consider the responses received carefully.
HSBC declined to comment on the claims.
A Standard Chartered spokeswoman said: "We are not able to comment on the details of client transactions but can confirm that following an internal investigation accounts were closed by us in 2014."