This article is more than 1 year old

This article is more than 1 year old

Nigel Farage’s Brexit party has been asked to check £2.5m it has received in donations to ensure it has come from legitimate sources.

The Electoral Commission will oversee checks carried out by the fledgling political party after criticising the way the party accepts gifts through online payment systems such as PayPal.

Money that cannot be traced should be returned to the donor or given to the Treasury.

The request follows a report released by the commission last Wednesday that said the party’s structure “leaves it open to a high and ongoing risk of receiving and accepting impermissible donations”.

New documents from the commission, which were released on Monday, show the party has been asked to “review all payments, including those of £500 or below, it has received to date”.

The commission has also asked that the party amend its online system for accepting payments so that donors give their full address and contact details and that it use systems in future that will only accept payments from a card where the billing address matches the payer’s address.

Appearing before the digital, culture, media and sport committee, the commission’s director of regulation, Louise Edwards, said: “They need to go back and look at the payments they have received, over or under £500, and they need to satisfy themselves that they are sure those amounts of money are permissible. And if they are not, they need to forfeit those amounts of money.

“It’s for the party to satisfy themselves of that – and we’ll be watching them do that work.”

The party, which won 29 seats in last month’s European elections, could face penalties unless it overhauls its fundraising system to ensure all donations above £500 come from the UK, as the law requires.

Critics are concerned the party’s present system allows an individual or a foreign power to make many small payments to a party, each less than £500, with no legal requirement for any details to be submitted.

The elections watchdog also fined Labour a total of £1,750 for inaccurate quarterly donations reports and an inaccurate spending return for the last general election.

The Conservative party was given a £200 penalty in Wakefield for the late delivery of its 2017 statement of accounts, which it paid on 23 May.

Jeremy Corbyn’s party received four separate penalties, which it paid on 13 June, after an investigation by the commission.

Commenting on the Labour fines, Edwards said: “The reporting requirements are clear, so it is always disappointing when parties – especially well-resourced ones – fail to provide accurate reports.

“It is vital that voters are given an opportunity to see full, accurate data on where parties’ money comes from and how it is spent at elections. The commission will continue to enforce these requirements on all parties and campaigners to ensure that voters have the information they need.”

A Labour spokesman said: “We were happy to clear up these minor administrative issues.”

The Brexit party has been asked to respond.