While the Prime Minister says the Panama Papers leak won't damage New Zealand's reputation as one of the least-corrupt countries in the world, transparency campaigners are begging to differ.

Transparency International NZ (TINZ), which has former Deputy Prime Minister and Commonwealth Secretary-General Sir Don McKinnon as its patron, is calling the leak a "huge blow".

"New Zealand's trade -- essential to our prosperity and the wellbeing of our country's residents -- relies on our reputation for integrity," says TINZ chair Susan Snively.

Ms Snively says there is "no transparent mechanism" for reporting suspicious activity involving trusts to law enforcement and tax authorities, and it's not known how much money they hold or who benefits from their use.

"Immediate and substantial action must be taken by the Government to demonstrate world leadership in restricting the flow of ill-gotten funds and assets."

In 2013, the New Zealand National Integrity System Assessment -- produced by TINZ with assistance from the University of Victoria's School of Government -- recommended changes to New Zealand's trust laws, which Ms Snively says went ignored.

"These loopholes allow people to hide money gained through crime and/or money laundering using trusts registered in New Zealand," she says.

The 2013 report found:

"We have repeatedly warned that these factors are being exploited by overseas interests. They are setting up shell companies and trusts for those involved in corrupt and illegal activities, including tax evasion and money laundering," says Ms Snively.

Prime Minister John Key has rejected Opposition claims New Zealand is being used as a tax haven, saying New Zealand has "full disclosure of information" and "quite a legitimate regime".

He says a 2013 review by the OECD gave New Zealand's trust rules a "clean bill of health", but claims not to know if any of the money they hold came from illegal activities.

Newshub.