The Charity Commission, which has the responsibility for overseeing charities in Britain, has launched a formal inquiry into alleged UK links to an arms haul in Bangladesh.
The weapons cache was found in the south of the country at an Islamic school, or madrassa, allegedly run by a UK-based charity. A spokesperson for the Charity Commission told the BBC that they were investigating the "very serious" allegations.
Bangladeshi police say the arms were found in the coastal district of Bhola earlier this week. They say the cache included weapons, bomb-making equipment and bullets.
Police say that the madrassa is run by the Green Crescent charity based near Manchester in north-west England. So far the charity has made no response, either to media enquiries or on its website (http://www.greencrescent.org/ )
The Charity Commission said that the inquiry would focus on "determining the extent of the links" between the charity and the arms haul allegations.
It will aim to find out "whether or not the charity, its funds, or funds raised on its behalf were used unlawfully and the role of the trustees".
"We are working with relevant law enforcement and other agencies to investigate the allegation that terrorist activity is connected with the charity," Commission chief executive Andrew Hind told the BBC.
He added: "The matter is of serious concern to us, and we are taking this action given the gravity of the matter, the public interest and the need to protect charity work and funds."
The Green Crescent charity was created by students in 1998 from the United Kingdom and Bangladesh who "believed that individuals with vision are capable of changing society in a positive way and decided to do whatever possible to make life that much better for those who have very little," its website explains.
"The charity operates mainly in Bangladesh, but has also started some work in Pakistan. We concentrate on long-term education and health projects."
Mr Hind said the results of the inquiry would be made public once it was completed.