The European Union’s anti-fraud watchdog is considering whether Nigel Farage should be investigated for any illegal activity over lavish payment from Arron Banks, the Guardian has learned.

The agency, which goes by its French acronym, Olaf, revealed it was carrying out an assessment, which could lead to a formal investigation. This “initial assessment … does not mean that the individuals in question are guilty of any wrongdoing”, it said.

While not a full-blown inquiry, it is a rare and significant step for Olaf to consider investigating a member of the European parliament.

The European parliament this week opened an investigation into revelations made by Channel 4 that the insurance tycoon Arron Banks funded a lavish lifestyle for Farage in the year of the Brexit referendum. In 2016, Farage received expenses of about £450,000, including rent on a Chelsea home, furniture, security and promotional trips to the US, where he attended the Republican national convention.

Nothing was declared, an apparent violation of the European parliament’s code of conduct, which states that MEPs must report expensive gifts and attendance at events bankrolled by third parties.

Timeline Nigel Farage after the EU referendum Show Farage tells supporters the leave campaign has won a victory for 'real people', and says 23 June should go down as 'independence day' Announces his resignation as leader of Ukip for the second time Becomes the party’s interim leader following Diane James’s resignation after only 18 days in the role. Paul Nuttall succeeds Farage as leader in November He meets the then US president-elect, Donald Trump – the first UK politician to do so – telling press afterwards that critics of Trump should 'stop whingeing' and 'just get on with it' Hired as a commentator for Fox News, providing political analysis for its programmes Tells the Daily Telegraph he will not be standing in the general election on 8 June, because he has decided to 'fight for Brexit in Europe' instead Joins Leave Means Leave to campaign against Theresa May’s Chequers agreement. Is appointed the group’s vice-chairman shortly afterwards Announces resignation from Ukip over the appointment of Tommy Robinson as an adviser to party leader, Gerard Batten, and the decision of the national executive to keep Batten as leader of the party Confirms he will sit as a member of the Brexit party in the European parliament Officially announced as the new leader of the Brexit party Channel 4 News alleges Farage received £450,000 from Arron Banks in the year after the EU referendum

“We are aware of the press reports and public statements on the matter you are referring to,” a spokesperson for Olaf said, in response to questions from the Guardian. “It is only after such an initial assessment, which is currently ongoing, that Olaf decides whether or not to open an investigation.”

The agency usually takes two months to carry out an assessment, which will examine whether the case falls under its remit and if there is “sufficient suspicion of fraud, corruption or any illegal activity affecting the EU’s financial interests”.

It said: “The fact that Olaf will assess the information received does not mean that the individuals in question are guilty of any wrongdoing. Olaf fully respects the presumption of innocence.”

The spokesperson declined to comment on the details of the assessment.

The Guardian has contacted a spokesman for Farage and his group in the European parliament. His team have dismissed previous investigations by the European parliament as “politically motivated assaults” and “a vindictive campaign” targeting Eurosceptic MEPs.

Olaf investigates fraud against the EU budget, from evasion of customs duties to corrupt claims of EU funds. Its investigation of Marine Le Pen found that the French far-right leader had paid her bodyguard and a Paris-based assistant using money intended for staffing her parliamentary offices in Brussels and Strasbourg. Le Pen, who has always denied the charges, lost an appeal in the European court of justice this week against an order to repay the EU nearly €300,000 (£265,00).