Panama Papers El Salvador
Police investigators stand inside Mossack Fonseca offices in San Salvador, El Salvador, during a raid, April 8, 2016. REUTERS/Jose Cabezas

New Zealand launched an independent review Monday of its foreign trust laws in the aftermath of a massive data leak at Panama-based law firm Mossack Fonseca which suggested such trusts are being used to avoid taxes.

Bowing to pressure from the opposition to investigate the matter, the country’s Prime Minister John Key changed tack to say that the laws had to be scrutinized for loopholes, after defending New Zealand’s disclosure rules last week.

"Ministers decided that in light of the 'Panama Papers' being released last week, it's worth looking at whether the disclosure rules are fit for purpose and whether there are practical improvements we can make," said Finance Minister Bill English in a statement reported by local media.

Leaked Panama Papers excerpts showed that Mossack Fonseca bragged to clients about how weak New Zealand laws were around foreign trusts, Bloomberg reported.

On Monday the New Zealand government appointed John Shewan, former head of PricewaterhouseCoopers, to head a review panel into foreign trusts' disclosure rules on record keeping, enforcement and the exchange of information.

The fallout from the so-called Panama Papers leak gained momentum in the past week with U.K. Prime Minister David Cameron forced to reveal his tax records and European officials pledging to introduce measures which will require companies to report their offshore bank accounts. Sigmundur Davíð Gunnlaugsson resigned as Iceland’s prime minister over allegations of tax avoidance and Malta’s government faces a confidence vote.

The papers, shared by the International Consortium of Investigative Journalists with a number of other media outlets last week, documented 40 years' worth of records which showed how the world's mega-rich shelter their wealth and conceal its origins through shell companies based in tax havens like the British Virgin Islands.