Authorities in Panama on Friday raided a property used by Mossack Fonseca, the Panama-based law firm at the centre of a massive leak of confidential financial records dubbed the Panama Papers, removing bags full of shredded documents as evidence, a local prosecutor said.

"We have secured a large amount of evidence found in the location," said organised crime investigator Javier Caraballo.

He said they also found many shredded papers, which they removed as evidence.

However, in a statement, Mossack Fonseca said it had digitised all its documents and that the shredded papers taken from its premises were intended for recycling.

The law firm added that, as a result of a previous search of its offices, prosecutors already had copies of all the documents they removed on Friday.

Nevertheless, other reports claimed that, fearing the imminent filing of criminal charges against them, the partners at Mossack and Fonseca ordered several categories of files be immediately shredded.

Mossack Fonsecas original denial that the theft of confidential information was an inside job, performed by present or former employees, instead alleging that it resulted from a computer hack, has in turn been debunked by Panama law enforcement, who have confirmed, after extensive analysis and investigation, that no massive hacks of data ever took place.

Leaks from the Panama-based law firm have embarrassed several world leaders and shone a spotlight on the shadowy world of offshore companies, Reuters noted.

The scandal broke in early April when German newspaper Sueddeutsche Zeitung said it had received a cache of 11.5 million leaked documents from Mossack Fonseca and then shared them with more than 100 other international news outlets and the International Consortium of Investigative Journalists (ICIJ).

Mossack Fonseca, which specialises in setting up offshore companies, has claimed it broke no laws, destroyed no documents, and all its operations were legal.

The superintendent of banking in Panama (Superintendencia de Bancos de Panam) has, however, cautioned the country's banks that they may be required to disclose details of their business with Mossack and Fonseca, including the names of corporations formed by that law firm holding accounts at the banks, and the identities of directors of those companies.

Although, on the surface, this appears to be a heads-up, allowing the banks to search their records and to prepare to respond when so ordered, other observers in Panama assert that the warnings were only delivered to give the banks, many of which openly engage in money laundering, time to destroy incriminating books and records.

Meanwhile, US authorities have launched a criminal inquiry into several of the 200 US citizens reportedly named in the Panama Papers.

The ICIJ confirmed that it received an email (published by the Guardian newspaper) from US Attorney Preet Bharara for the Southern District of New York indicating that his office had opened a criminal investigation regarding matters to which the Panama Papers are relevant.