UK financial regulators and the Serious Fraud Office are to review if banks HSBC and Standard Chartered are linked to a South Africa corruption scandal.
It comes after Lord Peter Hain said the banks may “inadvertently have been conduits” for laundered money.
The Labour peer told the House of Lords that up to £400m of illicit funds may have been moved by the banks.
His concerns relate to links between South Africa’s President Jacob Zuma and a wealthy business family, the Guptas.
The peer has written to the Chancellor Philip Hammond, telling him a whistle-blower had indicated the banks “maybe inadvertently have been conduits for the corrupt proceeds of money”.
Lord Hain told the BBC he named 27 people in the letter, in addition to companies, adding that any person or firm linked to alleged corruption in South Africa is “going to be badly contaminated”.
The Treasury has asked regulators, including the Financial Conduct Authority, and the SFO to look into the allegations.
A Treasury spokesman 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,” a spokesperson said.
The BBC’s correspondent in Johannesburg, Andrew Harding, said Lord Hain’s letter was “a new twist in a giant corruption scandal that is shaking the South Africa state, and damaging the reputations of a number of global companies”.