Prime Minister John Key says he's had a second assurance from his minister outside Cabinet John Banks that he has not acted unlawfully.

Police are investigating whether the ACT Party leader knew the sources of two $25,000 donations from German billionaire Kim Dotcom and a $15,000 donation from Sky City towards his failed 2010 Auckland mayoralty campaign.

All three donations were declared as anonymous on his official return. Candidates must declare donations over $1000 if they know who they are from.

MAARTEN HOLL/Fairfax NZ FIRING LINE: John Banks faces questions in Parliament.

Key this afternoon said Banks had again assured his office, following an earlier assurance over the weekend.

However, the prime minister has not directly spoken to Banks.

"I don't need to. I've had a cast iron assurance from him that he applied with the Local Electoral Act. That's good enough for me."

Banks yesterday admitted he had not been "up front" over his relationship with Dotcom but said it was because of legal advice he received.

Although he initially said his total interactions with Dotcom totalled a 20 minute conversation, it has now been revealed he has flown in his helicopter, had lunch at his mansion and watched a fireworks display with him.

Key earlier said if Banks was found to have lied over the donation from Dotcom he would be stripped of his portfolios.

This morning Banks acknowledged he had updated Dotcom on his application to the Overseas Investment Office (OIO) to buy property in New Zealand.

Dotcom applied to OIO last year to buy the $30 million mansion he rents in Coatesville, a $5m neighbouring property and a $10m beach house at Northland's Doubtless Bay.

The OIO recommended the Government approve the sales and Williamson initially approved the purchases, but he changed his decision after former fellow minister Simon Power turned it down because of concern Dotcom did not meet good character tests.

A spokeswoman for Banks said he had called Dotcom's bodyguard Wayne Tempero "at least once".

''Mr Banks communicated with Mr Tempero that the OIO application was continuing to progress through the approval process.''

He did not indicated the application was going to be approved, she said.

A spokeswoman for Williamson confirmed Banks made one phone call to the minister.

"To which the minister said that process is still ongoing."

Suggestions the minister regularly updated Banks were incorrect, she said.

Ministers are expected to keep details of such commercially sensitive applications confidential until they are determined.

Banks this afternoon said he did not tell Dotcom his application to buy property was likely to be accepted.

"I talked to Williamson and I reported to Wayne Tempero that the application was progressing through the channels."

Asked to confirm he had not assured Dotcom, Banks repeated the line "progressing through the channels".

ACT party president Chris Simmons said he ''100 per cent'' stood by Banks.

''There is a proper course for this to go through. John will be full and frank in that inquiry and I feel very comfortable that that's as far as it will go.''

Banks was not an MP, minister or ACT leader at the time, he told Radio New Zealand.

''You can't ask people to stand up and do more than the letter of the law... you've got to hold them accountable to the law not to some moral standard.''