Britain's Electoral Commission regulator said on Monday it would review fundraising by the new Brexit Party founded by anti-EU populist Nigel Farage, which is predicted to win this week's European elections.
"We are attending the Brexit Party's office tomorrow to conduct a review of the systems it has in place to receive funds," a spokesperson for the commission said in a statement.
"If there's evidence that the law may have been broken, we will consider that in line with our enforcement policy." The move follows a growing furore around the financing of the fledgling eurosceptic party, set up by the controversial MEP in January in protest at the government's failure to deliver Brexit.
It claims to have registered nearly 110,000 supporters paying 25 pounds (USD32, 29 euros) annual membership fees, but has drawn scrutiny for using a PayPal system that critics claim is too open.
British law only regulates donations to political parties ver 17?500, which must come from UK citizens or UK-registered companies.
Labour MP Chris Bryant was among those to raise concerns, saying it would be "simple" for a foreign power or individual to donate "hundreds or thousands of ?499 in sterling or other currencies".
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"Our democracy is basically up for sale," he said.
The Daily Mirror newspaper last week reported it had signed up as a Brexit Party supporter under the name of Russian President Vladimir Putin, giving the address of the Kremlin in Russia. "The Brexit Party, like all registered political parties, has to comply with laws that require any donation it accepts of over ?500 to be from a permissible source," the commission added in its statement.
Farage has branded the increasing interest in his new venture's funding a "disgusting smear" and "conspiracy theorists doing their utmost to try and delegitimise" it.
"This smacks of jealousy because the other parties simply can't do this," he said Monday.
Meanwhile it emerged last week that businessman Arron Banks, the single largest bankroller in the 2016 EU referendum, had spent around ?450,000 funding Farage's lifestyle.
The post-referendum expenses included paying for a central London home and office for Farage, as well as a car and driver, according to Channel 4 News.
Banks, who is currently under investigation by Britain's National Crime Agency over the source of his millions of pounds in funding for the Brexit campaign, also spent hundreds of thousands promoting Farage in the United States, it said.
After a spokesperson for Banks' companies confirmed the expenditures, the Brexit Party leader dismissed them as "a purely private matter" and "non-political".
Farage added Banks was not financing the new party.