So, apparently the disclosure rules in the Local Electoral Act allow a candidate to solicit a large donation, instruct how it is to be paid, phone the donor up to thank them after it has been received, and then claim the donation is "anonymous". To call this "unsatisfactory" is an understatement. The purpose of the law is transparency, to allow the public to know who a politician is beholden to. If it allows this, then the law is simply not fit for purpose.
We used to have this problem on a national level. Labour fixed it with the Electoral Finance Act, and National carried over those changes when it repealed the law. Clearly, we need to do the same for the Local Electoral Act. Tighten disclosure rules. Bust the trusts. Increase penalties. And above all, make it clear to politicians that they cannot get away with this sort of shady backroom dealing. We deserve clean politics, at the local level as well as the national one. And if after this the government sits on its hands and does nothing about the obvious problem, they can only be regarded as complicit.
As for Banks, regardless of whether he is found to have been acting within the law or not, he has marked himself as a dishonest man, who set out to deliberately hide his finances and thwart the law. That's not acceptable, and a decent Prime Minister would refuse to have him in his Cabinet. Key of course is not a decent Prime Minister, and is making excuses for him. Another example of his "higher standards of government", I guess.