Theresa May is under pressure to tell taxpayers whether any of the reported £1 million payout to a former Guantanamo Bay detainee who became an Islamic State suicide bomber funded the terror group.
Former home secretary David Blunkett also called on the Prime Minister to restore ‘control orders’, dumped by the previous coalition government amid civil liberties fears.
Mrs May has also faced questioned about whether the man was being monitored when he went abroad to join IS.
Earlier this week IS announced that he died this week carrying out a suicide car-bombing in Mosul, Iraq.
Lord Blunkett told BBC Radio 4’s Today programme: "Two things should have happened and I am surprised the Government haven’t clarified this already.
"Firstly the money itself needed to be monitored under the money laundering requirements … and, secondly, if you had any doubt whatsoever about the individual’s behaviour you would have them flagged, they would be on the list, and therefore their movements in and out of the country in particular would be flagged.
"We need to examine whether the money laundering requirements in these cases have been robust enough, not because we know that any of this money has been transferred out of the country, but because we need to reassure people."
No 10 has refused to say anything about the case saying it is a long-running policy not to comment on intelligence matters.
Abu Zakariya al-Britani, identified as Muslim convert Ronald Fiddler and also known as Jamal Udeen, was released from Guantanamo Bay in 2004.
But the lucrative payment was signed off by the Conservative-led coalition government six years later, when Mrs May was the Home Secretary.
Fiddler's family have played down suggestions that he had received as much as £1 million.
Ministers have defended the payments saying that they were necessary to protect key sources from being revealed in court.
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