UPDATE 5-Europe's banks under scrutiny as regulators look into Panama Papers
* Head of FINMA says risk posed by money laundering on rise
* Geneva prosecutor opens criminal inquiry linked to Panama Papers
* Panama law firm Mossack Fonseca has bureaux in Zurich, Geneva (Adds U.S. Senators write to Treasury Dept.)
By Joshua Franklin and Stephanie Nebehay
BERN/GENEVA, April 7 (Reuters) - Banking watchdogs across Europe have begun checking whether lenders have ties to a massive document leak from Panama that showed how offshore companies are used to stash clients' wealth.
Switzerland's financial watchdog FINMA said on Thursday that banks must clamp down on money laundering, as the Geneva prosecutor opened a criminal probe.
Four decades of documents from Panamanian law firm Mossack Fonseca, which specialises in setting up offshore companies and has offices in Zurich and Geneva, showed widespread use of those instruments by global banks and triggered investigations across the world.
"Do I think we are where we should be in fighting misuse in the financial system? No," FINMA Chief Executive Mark Branson told Reuters following its annual news conference.
"We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done. We don't want to see large scandals involving Swiss banks." Continuación...