Britain has introduced stricter regulations on overseas political donations to prevent foreign funds from shaping election outcomes, responding to worries about what Housing Minister Steve Reed described as "dodgy funding."

The government launched a review of foreign financial interference in politics last year after a former Reform UK politician received a prison sentence for accepting bribes in exchange for pro-Russia comments and speeches.

Findings from the review showed that Britain continues to encounter efforts by foreign states such as Russia, China and Iran to sway and weaken its democratic systems, leading officials to roll out the updated measures.

The changes coincide with an inquiry by the parliamentary standards watchdog into Reform UK leader Nigel Farage, examining whether he properly declared a 5 million pound donation from a Thailand-based cryptocurrency billionaire made before Farage announced his parliamentary candidacy.

Under the new guidelines from the Ministry of Housing, Communities and Local Government, candidates must now disclose any donations exceeding 2,230 pounds received before their candidacy and demonstrate that such funds originated from lawful sources.

"By holding overseas donors to tougher standards and requiring candidates to prove where their funding comes from, we are taking world-leading action to protect the integrity of our elections and tackle the threats we face from abroad," Reed said.

New UK citizens must live in country for a year before making large donations

Additional measures require new residents from abroad to live permanently in the UK for one year before making political donations of 100,000 pounds or higher, while company donations will be evaluated based on prior post-tax profits instead of revenue to confirm only legitimate UK-connected firms can contribute.

The rules expand on earlier steps from March that limited annual donations by Britons living overseas to 100,000 pounds and prohibited cryptocurrency contributions until proper oversight is in place.

Reform UK, which has led national opinion polls for more than a year, maintains that no regulations were violated regarding the donation to Farage from crypto investor Christopher Harborne, who accounted for roughly two-thirds of the party's funding last year according to Electoral Commission records.

Farage was referred to the parliamentary standards watchdog on Sunday following a report that claimed he had not declared further benefits.