The FCA wrote to 20 banks and other financial institutions asking if they have had dealings with Mossack Fonseca, the Panama law firm at the heart of a massive leak of offshore financial data.

The banks were given an April 15 deadline to respond to a number of questions about relations with Mossack Fonseca and what were they doing internally regarding their exposure, FCA acting Chief Executive Tracey McDermott told parliament's Treasury Select Committee.

A second tranche of firms has been contacted and given a slightly later deadline to respond, she added. An FCA spokesman said this second wave comprises 40 financial firms.

"It is far too early to give any view as to preliminary findings," FCA acting Chief Executive Tracey McDermott told lawmakers.

"We are making enquiries with both our regulatory and our law enforcement hat on."

There was nothing necessarily illegal in offshore arrangements and not all of the Panama Papers have been released to authorities like the FCA, McDermott said.

A significant amount of business in Panama would be expected to be "perfectly legal", she added.

Leaks from the Panama Papers have embarrassed several world leaders and shone a spotlight on the shadowy world of offshore companies. Mossack Fonseca has said it broke no laws, destroyed no documents, and all its operations were legal.

McDermott said the FCA is also part of the task-force led by the UK tax authority, the National Crime Agency and the Serious Fraud Office to coordinate any response to issues that emerge.

The FCA has put together a team of people to look at the responses from banks.

Some serious criminal issues have been reported in the media but it was hard to work out whether this was just the tip of the iceberg, McDermott said.

"The challenge at the moment is actually knowing what the iceberg is," McDermott said.

"We need to understand a little bit more about the factual position in relation to these issues before we can say it's an enormous problem from a perspective of the legal framework."

(Reporting by Huw Jones; Editing by Mark Potter and Louise Heavens)

By Huw Jones