Substantial financial donations to political parties in Northern Ireland could be monitored through the inspection of party accounts, according to Sir Kenneth Bloomfield, the former head of the civil service in Northern Ireland.
Addressing the Committee on Standards in Public Life, which held a public hearing in Belfast yesterday, he expressed particular concern over large political donations from the US and said penalties could be imposed where payments breached certain regulations.
Very rich Americans from the Irish diaspora could exert influence over a relatively poor jurisdiction by making such financial donations, he said.
"I think one has to look at the richness of the donor and the relative poverty of the recipient in deciding whether this is equitable," he said.
However, Sir Kenneth, whose home was bombed by the IRA 10 years ago, warned that disclosing the identities of donors could pose "a very real security risk".
"I think the main argument for avoiding disclosure is in terms of people who are on the local scene here and who are exposed, unfortunately, to the kind of danger we are talking about," he said.
"But I don't think it would be altogether inconceivable to adopt a different regime for contributions from another jurisdiction. It is rather exceptional that we have permitted this kind of support from outside the country and we could tell people that they must realise, if they do this, that there is a limit set and also that your donation will be known."
The Committee on Standards in Public Life was set up in 1994 by the former British prime minister Mr John Major to examine the standards of conduct of all holders of public office.
In 1997, the terms of reference were widened to investigate matters relating to the funding of political parties. Sir Kenneth, one of the witnesses at the committee's first hearing, drew attention to the recent controversy in the Republic regarding donations to politicians and said it was "very important to try and avoid that".
He suggested that data be published which would reveal the extent to which political parties relied on very substantial donations from individuals and companies.
"I would rather, in principle, see full disclosure. I think it is right to have full disclosure of very substantial amounts and it is very important to try and avoid the kind of situation which has arisen elsewhere," he told the committee.