Russia on Tuesday opened a legal case against election monitoring group Golos (Voice) after it failed to declare foreign funding and its status as "foreign agent" under a controversial new law.
The move comes as the authorities carry out a wide-ranging crackdown on NGOs that has included raids by prosecutors and sparked international concern.
The justice ministry accused Golos and its executive director Lilia Shibanova of receiving foreign funding but failing to declare itself as a "foreign agent" as required by the new law which has been criticised as a throwback to the Soviet past.
The high-profile group could be fined up to 500,000 rubles ($16,000) and its executive director up to 300,000 rubles ($9,600).
Shibanova is a member of the presidential rights council, an advisory body to President Vladimir Putin.
"The group receives foreign funding and carries out political activities in Russia, thus it fulfils the functions of a foreign agent," the ministry said in a statement.
It specified that the group was carrying out a "political" task of proposing reforms of the country's electoral laws. The ministry said it would send the documents to court on Wednesday.
The first use of the Soviet-sounding charge against a prominent group came after Russian prosecutors carried out an unprecedented wave of searches of more than 100 NGOs including Amnesty International and Human Rights Watch.
The justice ministry said in a report published Tuesday that it planned 7,357 checks of NGOs this year.
Golos, which has reported widespread irregularities in recent parliamentary and presidential polls, denied Tuesday that it received any foreign funding in the period under consideration except for a rights prize from Norway.
"This all looks absurd since the association has not received any grants since the agent law came into force," deputy executive director Grigory Melkonyants wrote on Facebook.
"This is a political order," he added.
The group's lawyer Ramil Akhmedgaliyev told the Echo of Moscow radio station that the accusation focused on the Sakharov Freedom Prize, awarded to the group last year by the Norwegian Helsinki Committee, even though this was before the law came into force in November.
"The justice ministry named as a breach of the law that Golos received the Sakharov prize," the lawyer said.
The group asked the bank to return the 7,000 euro ($9,141) prize money in January because of the new law, Pavel Chikov, the head of advocacy group Agora that represents Golos, said on Twitter.
Putin in an interview with German ARD television last week said that NGOs had received 28.3 billion rubles ($909 million) in funding from abroad in the first four months after the law was passed.
USAID, the US agency for international development, used to provide significant funding to Golos but has been banned from working in Russia.
Golos published findings that Putin won less than 51 percent in March 2012 polls, against the official result of 64 percent.
Ahead of parliamentary elections in 2011, Putin compared groups that received international funding to monitor polls to Judas, the disciple who betrayed Jesus Christ.