The British Charity Commission said on Thursday that it was formally investigating the aid group Crescent Relief and had frozen its funds, following allegations that the charity was linked to a thwarted terrorist plot to blow up trans-Atlantic flights.
The commission said it was looking into what it called "very serious" allegations of potential "terrorist abuse of charitable funds" at Crescent Relief.
"The inquiry will focus on whether or not the charity's funds, or funds raised on its behalf, were used unlawfully," the statement said. "It will also consider the financial policies and practices of the charity."
Crescent Relief was registered as a charity in July 2001 and its list of original directors included the father of Rashid Rauf, a terrorism suspect arrested in Pakistan in connection with the foiled airline bombing plot earlier this month.
According to its Web site, Crescent Relief's aid projects include providing food, books and medicine to victims of the earthquake last year in Kashmir and the 2004 tsunami in Indonesia. The group has denied financing terrorism. The charity's actions raised some red flags at its bank last year, after one member attempted to send about ?50,000 (US$94,000) to Pakistan without the proper identification.
Also on Thursday, British police said they had charged a 12th suspect in the plot, saying he had failed to disclose information that could have helped prevent it. The suspect, Umair Hussain, 24, is the brother of Mehran Hussain, 23, who has been charged in connection to the plot, and Nabeel Hussain, 22, who is being held but has not yet been charged. Eight suspects appeared in British court this week charged with conspiracy to murder and preparing to commit acts of terrorism.
The police also said they had arrested an unidentified, 27-year-old Manchester man on suspicion of terrorism offenses. His arrest is not tied to the transatlantic airline plot, the Greater Manchester Police said.