An EU official has threatened to sanction Panama and other nations if they do not cooperate fully to fight money laundering and tax evasion, after a leak of data showed the small country remains a key destination for people who want to hide money.

The 11.5 million documents leaked from the Panama-based law firm Mossack Fonseca showed it helped thousands of individuals and companies from around the world set up shell companies and offshore accounts in low-tax havens.

Because such accounts often hide the ultimate owner of assets, they are a favoured tool to evade taxes, launder money or pay bribes.

So far, the scandal has brought down the prime minister of Iceland and raised questions about the dealings of the presidents of Argentina and Ukraine, senior Chinese politicians, famous actors, athletes and a circle of friends of Russian president Vladimir Putin, who some allege has profited indirectly from such accounts.

Prime Minister David Cameron acknowledged he profited from his father's investments in an offshore tax haven before being elected.

Pierre Moscovici, who heads financial affairs for the EU, said: "People are fed up with these outrages."

He took to task countries like Panama which facilitate such secretive, low-tax accounts, saying: "The amounts of money, the jurisdictions and the names associated with this affair are frankly shocking."

Panama is listed by the EU as a country that is not cooperative on tax issues, and Mr Moscovici urged the country to "rethink its position in this regard".

The EU has to "be ready to hit them with appropriate sanctions if they refuse to change," he said.

The Central American country's government is offering further cooperation. On Wednesday, president Juan Carlos Varela announced the creation of an international committee of experts to recommend ways to boost transparency in Panama's offshore financial industry.

But Mr Varela defended his country against what he called a "media attack" by wealthy nations which he says are ignoring their own deficiencies and unfairly stigmatising Panama.

Ramon Fonseca, a co-founder of the law firm at the center of the scandal and until recently a top adviser to Mr Varela, said the only law that has been broken so far is the right to his clients' privacy. He said the biggest source of secretive shell companies is Europe and the US.

Mr Fonseca said: "If a company in England has problems nobody says anything against England, but when it happens to a firm in Panama it's a big problem and the entire world beats up on poor Panama."

He said his firm creates about 20,000 shell companies annually but also rejects about 70 to 80 clients every year due to conflicts that crop up during due diligence.

"We're not perfect and some surely escape by," he said. "But in all our years in business we've never been accused or condemned by a court."

Europe also is home to countries with a record of acting like tax havens and providing banking secrecy - Luxembourg, Switzerland and Andorra, among others. The US has also become a haven, with several states including Wyoming and Delaware now popular places to open anonymous accounts that are cheap to maintain and pay little or no local tax.

Since the first reports based on Mossack Fonseca documents were published on Sunday, prominent politicians, celebrities and businesspeople have had their offshore business dealings dragged into the spotlight.

On Thursday, the German newspaper that first obtained what have been dubbed the Panama Papers said it will not publish all the files, arguing that not all are of public interest.

Sueddeutsche Zeitung received the documents from an unidentified source more than a year ago and shared at least parts of them with dozens of other media outlets around the world.

Fonseca said his firm has hired forensic experts to investigate and have already uncovered the method used to penetrate its systems. He said the hack was probably carried out from Europe and dismissed speculation it may have been an inside job.

Sueddeutsche Zeitung and the Washington-based International Consortium of Investigative Journalists (ICIJ), which helped coordinate reporting on the leak, have said they will not make the complete set of 11.5 million documents available to the public or law enforcement, but rather mine the information for details of public interest.

Responding to readers' queries about the absence of prominent German or American politicians in the reports, Sueddeutsche Zeitung said such names have not yet been found in the documents. It said the files include copies of the passports of 200 Americans and about 3,500 shareholders in offshore companies have listed addresses in the United States

Mr Fonseca said his firm has only a handful of American clients, mostly expatriates living in Panama. He added that both he and his German-born partner have long-standing ties to Europe and over the years have focused their business there and in Latin America.

An Argentine prosecutor has also asked a judge to authorise an investigation into president Mauricio Macri's role in offshore companies. Federal prosecutors said an investigation is necessary to see whether Mr Macri "maliciously" omitted his role in two offshore companies in his annual tax declarations.

In Russia, president Vladimir Putin denied having any links to offshore accounts and described the document leaks scandal as part of a US-led plot to weaken Russia.

The ICIJ said the documents it obtained indicated that Russian cellist Sergei Roldugin acted as a front man for a network of Putin loyalists and, perhaps, the president himself.

The ICIJ said the documents show how complex offshore financial deals channelled as much as two billion dollars (£1.4 billion) to a network of people linked to the Russian president.