BREXIT campaigner Arron Banks is being investigated by the elections watchdog over whether he breached campaign finance rules on donations in the 2016 EU referendum.

The Electoral Commission said it will probe whether the former Ukip donor and Leave.EU chairman may have committed offences over donations or loans made to campaigners in the referendum.

Responding, Mr Banks tweeted: "Gosh I'm terrified."

The investigation will also look into Better for the Country Limited (BFTCL), a company that lists Mr Banks as a director and has its registered office at the same address at Leave.EU.

The firm was not registered as a permitted participant in the referendum and five registered campaigners reported donations from it totalling more than £2.3 million.

Mr Banks made three loans worth £6 million on non-commercial terms to Leave.EU.

The investigation will look at whether BFTCL, Mr Banks and recipients of funds from them may have committed offences under election law.

The commission will look at: :: Whether BFTCL was the true source of donations made to referendum campaigners in its name, or if it was acting as an agent :: Whether the recipients of the donations were given the information required by the Political Parties, Elections and Referendums Act 2000 (PPERA) in respect of the donor :: What steps the recipients took to verify the identity and permissibility of BFTCL as a donor :: Whether Mr Banks was the true source of loans reported by a referendum campaigner in his name and whether those involved in that arrangement acted in accordance with PPERA :: Whether any individual facilitated a transaction with a non-qualifying person Bob Posner, the commission's director of political finance and regulation, and legal counsel, said: "Interest in the funding of the EU referendum campaigns remains widespread.

"Questions over the legitimacy of funding provided to campaigners at the referendum risks causing harm to voters' confidence.

"It is therefore in the public interest that the Electoral Commission seeks to ascertain whether or not impermissible donations were given to referendum campaigners and if any other related offences have taken place."

Among the recipients of donations from BFTCL was the Grassroots Out campaign which was supported by some Tory MPs, including Brexit Secretary David Davis.

Donations, made between March and June 2016, were also made to Trade Unionists Against the EU; Veterans for Britain; WAGTV Limited; and Ukip, led at the time by Nigel Farage.

In a statement, Mr Banks said allegations that Leave.EU was linked to Russian money were "complete bollocks", claiming his only involvement with Moscow was a "boozy six-hour lunch" with an ambassador which he has written about in a book.

Last month Labour MP Ben Bradshaw raised in the House of Commons concerns linked to openDemocracy reports on the role of "dark money" in the referendum, and the "real wealth" of Mr Banks, amid "widespread public concern about foreign, particularly Russian, interference in Western democracies".

But Mr Banks said: "The Leave.EU campaign was funded by myself, Peter Hargreaves and the general public.

"The Guardian allegations of Brexit being funded by the Russians and propagated by Ben Bradshaw are complete bollocks for beginning to end.

"My sole involvement with the 'Russians' was a boozy six-hour lunch with the ambassador where we drank the place dry (they have some cracking vodka and brandy).

"Turning to the investigation, we believe that a judge-led inquiry reporting to Parliament that investigates the main campaign groups, Vote Leave, Remain, and Leave.EU would be the best way to clear this nonsense up once and for all.

"The Remain 'Electoral Commission' isn't up to the job and consists of political place men from all main parties."

Mr Banks added: "Nostrovia".