The British government is preparing to tighten rules on political donations after two major reports warned that foreign interference in U.K. democracy is becoming more complex and harder to counter, spanning both financial systems and the information environment.

The changes follow the publication of the Rycroft Review on foreign financial interference earlier this week and a cross-party parliamentary report on foreign information manipulation and interference (FIMI) released Friday.

The parliamentary report warns that hostile actors are conducting sustained and increasingly sophisticated campaigns to interfere in democratic processes, exploiting divisive issues to amplify tensions and influence public debate. It describes such activity as part of a wider pattern of “hybrid threats” targeting democratic systems.

Although the government has sanctioned dozens of organizations and individuals responsible for Russian information warfare, the Foreign Affairs Committee said these efforts are “dwarfed by the global scale of the problem.”

It cited international examples such as Moldova, where disinformation campaigns linked to Russia reached tens of millions of views during its elections, raising concerns that similar tactics could be used in Britain.

Some actors targeting Westminster operate from states already identified as hostile, while others function through diffuse, transnational networks that include actors in allied countries, making attribution more difficult.

Elon Musk

The reports also raise concerns about wealthy individuals with significant global reach. “Lone individuals and social media platforms should not be discounted as significant sources of FIMI,” the committee said, citing Professor Vera Tolz-Zilitinkevic of the University of Manchester, who argued that Elon Musk’s influence in the U.K. may exceed that of Russia.

A paper by Brunel University’s Professor Justin Fisher pointed to the implications of high-profile figures engaging in U.K. politics from abroad, including reports that Musk had considered supporting Reform UK, a party polling strongly against the government.

Musk’s public commentary on politics in Britain, Brazil, France and Germany, as well as his interactions with far-right figures, has drawn criticism and been described in some cases as interference. While such activity is not necessarily unlawful, it has prompted questions about how financial resources and online influence could shape political discourse across borders.

The Rycroft Review places such concerns in a broader context, distinguishing between legitimate international engagement in U.K. politics and covert or deceptive interference intended to distort democratic outcomes.

Eliza Lockhart, a research fellow at the Royal United Services Institute, described the review as constrained but “a really positive step forward” that addresses critical vulnerabilities, particularly around foreign financial interference in politics and political financing.

Crypto donations

However, the review also acknowledges the difficulty of drawing clear boundaries, especially where funding routes are complex or activity occurs outside formal election periods. It emphasises transparency as the most effective way to distinguish legitimate participation from hidden influence.

In response, the government plans to impose a temporary ban on cryptocurrency donations and cap contributions from overseas voters at £100,000 annually. Ministers argue this will limit disproportionate financial influence from individuals with limited day-to-day ties to the U.K., while still allowing legitimate participation.

However the temporary ban would not necessarily address the most controversial cases. The Observer recently reported that Reform UK obscured the origin of donations initially made in cryptocurrency by converting them through a permissible donor into regular currency. The party said it complied with all legal requirements.

Lockhart, who co-authored a paper on cryptocurrencies in U.K. politics, said focusing solely on crypto donations misses broader risks.

“Most of the risk occurs upstream — before funds even reach political parties,” she said. Cryptocurrency can obscure the origin of funds that are later converted and donated through legitimate channels, meaning a ban would address only part of the problem. A more comprehensive regulatory framework is needed, she argued.

Ministers maintain that the current system remains broadly functional but acknowledge vulnerabilities, including limited transparency over donation sources, the use of U.K.-registered entities as intermediaries and the difficulty of tracing digital assets.

Lockhart noted that the Rycroft Review highlights a “fragmented and outdated patchwork” of electoral legislation. Many rules focus on formal election periods and fail to address influence activities outside them.

Britain’s transparency laws, she said, are rooted in a pre-Internet era when campaigning occurred within short, clearly defined windows. “That’s no longer how influence operates,” she explained, pointing to continuous, online-driven political engagement.

She added that modern interference strategies may avoid direct bribery in favour of shaping public discourse indirectly. “If I were a foreign actor, why bribe a politician when I could create a grassroots movement that shifts political dialogue in my favor?” she said.

Although such dynamics fall partly outside the review’s scope, they are central to the problem. Without a more fundamental rethink, incremental reforms are unlikely to be sufficient.

The parliamentary report similarly warns that current measures address only part of the threat. Foreign interference increasingly operates through coordinated information campaigns that are difficult to attribute and are often amplified by domestic actors.

It also criticises what it describes as a “fragmentary approach” across government, with responsibility for countering interference spread across multiple departments and agencies.

Both reports highlight challenges in enforcement, coordination and evidence. The Rycroft Review notes that financial influence is inherently difficult to trace, while the parliamentary inquiry finds limited evidence on the direct impact of disinformation campaigns.

The committee concludes that foreign interference is evolving faster than the U.K.’s response. Hostile actors are exploiting openness, technology and global networks to operate at scale. Without stronger coordination and systemic reform, it warns, democratic institutions risk becoming increasingly exposed.