Treasury minister Tulip Siddiq has resigned after growing pressure over an anti-corruption investigation in Bangladesh.

She had referred herself to the prime minister’s standards adviser, Sir Laurie Magnus, after questions about links to her aunt, who was ousted last year as Bangladesh’s prime minister.

Sir Laurie said he had “not identified evidence of improprieties” but it was “regrettable” that Siddiq had not been more alert to the “potential reputational risks” of the ties to her aunt.

Siddiq said continuing in her role would be “a distraction” for the government but insisted she had done nothing wrong.

In a letter accepting Siddiq’s resignation, Sir Keir said the “door remains open” for her.

Siddiq, whose role as Economic Secretary to the Treasury included tackling corruption in UK financial markets, was named last month in an investigation into claims her family embezzled up to £3.9bn from infrastructure spending in Bangladesh.

Her aunt is the former Bangladeshi prime minister Sheikh Hasina, head of the Awami League, who fled into exile after being deposed last year.

Siddiq, Labour MP for Hampstead and Highgate, also came under intense scrutiny over her use of properties in London linked to her aunt’s allies.

The Financial Times reported that one of the properties, a flat in King’s Cross, had been given to her by a person connected with the recently ousted Bangladeshi government.

According to the Mail on Sunday, in 2022 Siddiq had denied the flat was a gift and insisted her parents had bought it for her and had threatened the paper with legal action preventing publication of a story.

Labour sources subsequently told the newspaper the flat had been gifted to Siddiq by a property developer with alleged links to her aunt.

Sir Laurie spent eight days investigating the allegations after Siddiq referred herself to the standards watchdog.

In his letter, Sir Laurie said Siddiq “acknowledges that, over an extended period, she was unaware of the origins of her ownership of her flat in Kings Cross, despite having signed a Land Registry transfer form relating to the gift at the time”.

He said the MP “remained under the impression that her parents had given the flat to her, having purchased it from the previous owner”.

This had led to the public being “inadvertently misled” about the identity of the donor of the flat, added Sir Laurie.

Sir Laurie said this was an “unfortunate misunderstanding” which had led to Siddiq issuing a public correction of “the origins of her ownership after she became a minister”.

In the letter, Sir Laurie said: “A lack of records and lapse of time has meant that, unfortunately, I have not been able to obtain comprehensive comfort in relation to all the UK property-related matters referred to in the media.

“However, I have not identified evidence of improprieties connected with the actions taken by Ms Siddiq and/or her husband in relation to their ownership or occupation of the London properties that have been the subject of press attention.

“Similarly, I have found no suggestion of any unusual financial arrangements relating to Ms Siddiq’s ownership or occupation of the properties in question involving the Awami League (or its affiliated organisations) or the state of Bangladesh.

“In addition, I have found no evidence to suggest that Ms Siddiq’s and/or her husband’s financial assets, as disclosed to me, derive from anything other than legitimate means.”

In a letter responding to Siddiq, Sir Keir said he accepted her resignation “with sadness” and thanked her for her “commitment” during her time as a minister.

He said Sir Laurie had assured him that “he found no breach of the ministerial code and no evidence of financial improprieties on [Siddiq’s] part”.

Sir Keir’s Holborn and St Pancras constituency is next door to Tulip Siddiq’s Hampstead and Highgate seat.

They were both elected MPs for the first time in 2015 and have enjoyed a close working relationship.

Labour MP Emma Reynolds has been appointed the new Economic Secretary to the Treasury to replace Siddiq.

Reynolds first became an MP in 2010, before losing her seat in 2019. She returned to parliament in 2024’s general election after a stint as managing director at a financial and professional services lobbying firm.

Conservative leader Kemi Badenoch said the prime minister had “dithered and delayed to protect” Siddiq.

Writing on X, she said: “It was clear at the weekend that the anti-corruption minister’s position was completely untenable. Yet Keir Starmer dithered and delayed to protect his close friend.

“Even now, as Bangladesh files a criminal case against Tulip Siddiq, he expresses ‘sadness’ at her inevitable resignation.

“Weak leadership from a weak prime minister.”

Additional reporting by Tom McArthur