The European Union has threatened to impose sanctions on countries like Panama if they continue to refuse to cooperate fully to fight money laundering and tax evasion, after a leak of data showed the tiny country remains a key destination for people who want to hide money.

A leak of 11.5 million documents from Panama-based law firm Mossack Fonseca showed it had helped thousands of individuals and companies from around the world to set up shell companies and offshore accounts in low-tax havens. (Among them was Health and Energy Minister Konrad Mizzi)

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

"People are fed up with these outrages," said Pierre Moscovici, who heads financial affairs for the 28-nation EU.

"The amounts of money, the jurisdictions and the names associated with this affair are frankly shocking," he said. Speaking of countries like Panama, he said the EU has to "be ready to hit them with appropriate sanctions if they refuse to change".

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 Central American country's government said late on Wednesday it is creating an international committee of experts to recommend ways to boost transparency in its offshore financial industry.

President Juan Carlos Varela said the committee's findings will be shared with other nations so joint action can be taken to boost transparency in legal and financial centers worldwide.

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

Europe is also home to countries with a record of acting like tax havens - Luxembourg, Switzerland, Andorra, among others. The United States 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 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 the so-called 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.

Sueddeutsche Zeitung said the complete set of 11.5 million documents "won't be made available to the public or to law enforcement agencies. That's because the SZ isn't the extended arm of prosecutors or the tax investigators".

The Washington-based International Consortium of Investigative Journalists (ICIJ), which helped coordinate reporting on the leaks, also said it "will not release personal data en masse" but mine the information for details of public interest.

It was not clear if the German paper had shared all the data with the ICIJ and other media outlets or signed an accord with them on what could be reported on.

Authorities have legal powers to obtain such documents from those suspected of wrongdoing, and in many cases there is no public interest in revealing companies' or individuals' offshore business dealings, the Munich-based paper said.

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 documents include copies of the passports of 200 Americans, and about 3,500 shareholders in offshore companies listed addresses in the United States.

"One possible reason why comparatively few Americans appear in the documents could be that US citizens have no reason to contact a law firm in Panama," the paper said. "That's because offshore companies can easily be created in US states such as Wyoming, Delaware or Nevada."

Meanwhile, President Vladimir Putin has denied having any links to offshore accounts and described the Panama Papers document leaks scandal as part of a US-led plot to weaken Russia.

Speaking on Thursday at a media forum in St Petersburg, Mr Putin said Western media pushed the claims of his involvement in offshore businesses even though his name did not feature in any of the documents leaked from a Panamanian law firm.

Mr Putin described the allegations as part of the US-led disinformation campaign waged against Russia in order to weaken its government. "They are trying to destabilise us from within in order to make us more compliant," he said.

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 channeled as much as two billion US dollars (£1.42 billion) to a network of people linked to the Russian president.