ACT leader John Banks will not face prosecution over anonymous donations to his failed super-mayoralty campaign fund.

Police said yesterday they did not have the evidence to charge the Epsom MP over donations from Kim Dotcom and SkyCity.

Mr Banks said he had "always maintained" his 2010 campaign team acted within the law and was "glad that these matters can now be put behind us".

But sources close to the Epsom MP have indicated he will not stand at the next election.

The former National Party minister's return to politics has been dogged by controversy, first over the teapot tapes scandal and then over his relationship with Megaupload tycoon Dotcom, who is facing extradition to the United States on internet piracy charges.

Police found Mr Banks solicited money for his campaign from Dotcom. But they were unable to establish that Mr Banks knew the two $25,000 gifts were recorded as anonymous on his electoral return, which was compiled by volunteers.

In a letter to Labour MP Trevor Mallard, who laid the complaint, Detective Superintendent Peter Read said Mr Banks met the chief executive of casino operator SkyCity and was given a sealed envelope with a $15,000 cheque written out to "Team Banksie".

The gift was recorded in his electoral return as anonymous. Again police said they could not establish Mr Banks knew it was declared as anonymous.

They made the same finding about anonymous radio advertisements worth $15,690 - which Mr Banks "personally solicited" in September 2010.

And they were unable to consider other charges under the Local Electoral Act because they were time-barred.

Labour leader David Shearer said the police investigation confirmed Mr Banks asked for at least $80,000 in donations "but can't seem to remember it".

"He discussed them with the donors and even accepted a cheque for $15,000 in an envelope from the chief executive of SkyCity.

“Yet he claims that he can't remember any of that. That is simply not credible."

He called on Prime Minister John Key to sack Mr Banks as a minister.

“Every New Zealander knows what's gone on here even though the police can't charge him.

"John Banks has essentially escaped prosecution because he claims to have forgotten receiving any money.

"On the basis of his memory lapse alone, John Banks is not fit to serve as a minister."

He said Mr Key failed to ask Mr Banks "the hard questions" about donations. Mr Key said the complaint was "politically motivated".

“The minister has always given an assurance that he's complied with the law, and I believe that's been confirmed by the police,” he said.

ACT party president Chris Simmons did not return calls.

- © Fairfax NZ News