The £5m gift to Nigel Farage by a cryptocurrency billionaire was reported to the National Crime Agency by bankers who were concerned it may have been laundered money, the Guardian can reveal.

The disclosure will put further pressure on the Reform UK leader, who is awaiting a decision by the standards commissioner over whether his failure to declare the money breached parliamentary rules.

Farage was given a deadline of 1pm on Tuesday to respond to the Guardian about this article. He gave a video address at 2pm announcing he would force a byelection in his seat of Clacton-on-Sea.

That attempt to shake off the deepening scandal over his finances appeared to have backfired on Tuesday night as the Conservatives, Labour, Restore Britain and the Lib Dems all announced that they would not stand candidates in a contest described as a “media circus” and “vanity project”.

If Farage is reelected, he is still likely to face the parliamentary investigation and any reprimand that might follow.

The Guardian first revealed in April that Farage had been given £5m by the Reform donor Christopher Harborne.

Since then Farage has given differing explanations over what the money was for, and insisted he had no obligation to disclose it because he was not a politician at the time, claiming it had no bearing on his decision to stand in the 2024 general election.

However, the latest Guardian investigation will raise fresh questions over the gift.

According to financial industry sources, Farage received at least some of the £5m after he had announced on 23 May 2024 that he was not going to stand for parliament, saying it was “not the right time for me”. The balance of the £5m was received after he had ruled himself out, and shortly before he said he would run for the seat of Clacton in Essex.

The disclosure of the £5m gift has led to the biggest crisis of Farage’s political career.

In correspondence with the Guardian, Harborne’s lawyers have claimed Farage received the money on 5 April 2024. They did not provide a substantive response to detailed questions on the gift and a suspicious activity report (SAR) to the NCA.

In one of the letters sent to the Guardian, Farage said he did not know about the SAR. He added: “I have no reason to doubt the ultimate source of the money.”

He also repeated unsubstantiated accusations that the information had been “illegally obtained” by this newspaper.

Farage has said he was not in politics at the time, and claimed that meant he was under no obligation to disclose it. But within weeks – on 1 May 2024 – he became “a person of significant control” for Reform’s corporate entity, meaning he effectively owned and controlled the party. He was also honorary president of the party from March 2021 until June 2024.

Farage did not notify the parliamentary authorities about the gift, but came to the notice of bankers, who were not satisfied they could trace the ultimate origin of the funds.

Banks pay particular attention to the transactions involving so-called “politically exposed persons” because they are deemed to be at greater risk of bribery, corruption or other criminality.

Harborne’s involvement with cryptocurrencies also makes him higher risk in banking terms, as it is harder to track the wealth of individuals who transfer sums in and out of cryptocurrencies.

In this case, the Guardian understands bankers raised a suspicious activity report (SAR) over the gift on 16 May 2024 with the NCA. An SAR is not proof of wrongdoing – rather it is an invitation for the agency to examine the transaction to decide whether there are grounds to investigate it further. It is not the same as a crime report.

By mid-May, Farage had not received the full £5m, according to sources, and transfers were still not completed by 22 May, when he publicly ruled himself out of standing for parliament.

That announcement, however, appears at odds with details set out in a new book, The Farage Factor by Michael Ashcroft, who said plans were already in train to launch his candidacy by mid-May.

The book states: “By mid-May Reform had recruited Aaron Lobo, a GB News producer, to help promote an event at which Farage was going to announce his candidacy.” It adds that the Hippodrome in Leicester Square, London, was “under consideration” as a venue for the event.

Farage has repeatedly insisted the money was an “unconditional gift” and that he had no reason to declare it to the parliamentary authorities. But the timing of the transfers is bound to raise further questions about his decision to stand for parliament and whether receiving the money was a factor.

When asked about the gift, Farage has given a variety of explanations about what it was intended to be used for. Initially he said the money was given to pay for his security, then he described it as a reward for campaigning for Brexit. In sometimes tetchy exchanges with reporters, he has since said it was “nobody’s business” what he did with the money, and that he could spend it on Ferrari sports cars if he wanted to.

Asked about the SAR, Farage repeated his claim that the information about the £5m had been obtained illegally. He said he was not aware of any “discussions” with the NCA about transactions he had been involved with.

In a letter to the Guardian he said: “I have no reason to doubt the ultimate source of the money.”

Lawyers acting for Harborne did not respond to a request for comment and detailed questions.

In April, Harborne said in an interview with the Telegraph that the money was “to support Nigel’s security not just now, but for the rest of his life”. He added that at the time he made the gift “I never thought he would go back into politics”.

A spokesperson for the NCA said: “The NCA does not confirm or deny the receipt of SARs, nor comment on how any SAR is used. SARs are confidential and breaching that confidentiality risks committing a tipping off offence under the Proceeds of Crime Act.”

The NCA receives several hundreds of thousands of SARs each year. The relatively small team which handles them has previously struggled to keep pace with reports and flag those that merit deeper investigation.

The Guardian understands that the NCA has doubled the team which receives SARs in recent years, replaced IT systems that store and share reports with law enforcement agencies, and sought to improve the quality of reports with new guidelines.