On a warm July morning this year, staff at Conservative party headquarters logged a single political donation big enough to pay for a sizeable chunk of an election campaign: £300,000 wired from one of Europe’s oldest private banks, Berenberg, whose London offices sit a few doors from the Bank of England.

Within four days, the money had quietly gone back. What looked like a windfall from a prestigious City player turned out to be an unlawful gift under UK election law – and, according to Electoral Commission data later analysed by the Financial Times, the largest impermissible political donation recorded since the watchdog began publishing figures in 2001.

The payment was made on 3 July by Joh Berenberg, Gossler & Co KG, the Hamburg‑based partnership that is the bank’s main legal entity. Under the Political Parties, Elections and Referendums Act 2000, political parties can only accept corporate donations from companies that are registered at Companies House, incorporated in the UK and carrying on business here. Berenberg, while listed as an overseas entity at Companies House and employing around 400 people in its Threadneedle Street branch, is incorporated in Germany and therefore does not qualify.

Electoral Commission guidance requires parties to take “all reasonable steps” to verify the identity and status of donors and to return any impermissible money within 30 days. If they keep such a donation beyond that point they are deemed to have accepted it, potentially committing a criminal offence and facing forfeiture proceedings. In this case, Conservative officials returned the £300,000 on 7 July, well inside the legal window.

That prompt repayment means the episode is unlikely to trigger formal sanctions. Yet it has raised questions about the robustness of compliance checks inside both the party and the bank. “These are not obscure parts of electoral law, it’s a two‑minute Google job. Someone at the office has messed up,” said Robert Ford, professor of political science at the University of Manchester.

The Conservatives have declined to discuss the internal handling of the donation in detail, but stress that the money was rejected as soon as the legal problem was identified. A party spokesperson said it was “proud to have the support of leading figures in business”, while noting that the Berenberg funds were not ultimately used.

For Berenberg, founded in 1590 and still largely owned by descendants of its founders and other wealthy German families, the affair is an awkward misstep in a market it has spent years cultivating. The bank manages about €39bn in assets and has built up a significant presence in London investment banking. It has given more than €900,000 to political parties in Germany since 2010, mostly to the centre‑right Christian Democrats, but this appears to have been its first foray into direct party funding in Britain. The bank told the FT the donation was made in good faith; it has otherwise declined substantive comment.

The size of the cheque is modest when set against the lawful “mega‑donations” that now punctuate Britain’s political balance sheets. In 2023 the Conservatives received £10m from health‑tech entrepreneur Frank Hester, while this year businessman Christopher Harborne gave £9m to Reform UK – one of the largest individual donations ever made to a UK political party. Parties collectively received about £93m in donations in 2023 and nearly £13m in the first quarter of 2025 alone.

What makes Berenberg’s £300,000 stand out is not so much the sum as its legal status. Electoral Commission records show it as the biggest impermissible donation on record, overtaking a £100,000 payment earlier in 2025 from Bellcave Ltd, a holding company linked to Greybull Capital, to Reform UK. That donation was also returned after concerns that Bellcave was not genuinely trading; Greybull later gave the party £100,000 directly on a lawful basis.

Alongside such clear‑cut cases sit more ambiguous flows of money. Research for Parliament’s House of Commons Library and separate analysis cited by the Observer suggest that around £115m in UK political donations between 2001 and 2024 came from unknown or questionable sources, accounting for roughly a tenth of all private funding. About £81.6m of that total went to the Conservative party. Campaigners argue that current rules make it too easy for foreign interests to route money through UK‑incorporated companies or opaque unincorporated associations.

The Electoral Commission has repeatedly called for tighter company‑donation rules, including limiting gifts to money actually made from UK trading, and for a statutory requirement on parties to carry out rigorous “know your donor” checks. “There are parts of the system that need strengthening,” Jackie Killeen, one of the Commission’s directors, has said, urging reforms to bring political finance closer to anti‑money‑laundering standards in the corporate world.

Ministers have signalled they are listening. In July the government announced plans to raise the maximum fine the Commission can impose from £20,000 per offence to as much as £500,000 in serious cases, to close off routes for foreign money via shell companies and to mandate enhanced scrutiny of higher‑risk donors such as companies and unincorporated associations. Rushanara Ali, the minister for democracy, said the aim was to “strengthen” protections for UK elections and “close loopholes” that could be exploited by overseas interests.

Against that backdrop, the Berenberg episode offers a neat, if embarrassing, case study: a plainly foreign‑incorporated bank, a major party eager for funds, and a set of eligibility rules that are straightforward on paper but still tripped up two sophisticated institutions. The money never touched a campaign, yet its brief journey through Conservative accounts is now etched into the public record as the largest unlawful donation in modern British politics.

As parties compete for ever larger cheques ahead of future contests, the incident underlines how heavily the system still relies on those parties to police themselves – and how a single misjudged transfer can crystallise wider anxieties about the role of foreign and opaque money in the UK’s democracy.