The Charity Commission has launched a statutory inquiry into an Ipswich-based mosque after it loaned a "sizeable section" of its assets to two people in the local community.

The Ipswich Kurdish Islamic Cultural Centre became subject of an inquiry last month after red flags were raised during an inspection of the charity in March.

A statement by the Charity Commission said trustees were unable to provide records to effectively demonstrate details of full income and expenditure. It also found evidence of ineffective financial controls.

The charity became subject to closer monitoring in March, with information requested from trustees. But that information repeatedly failed to materialise, the regulator said.

A statement by the regulator said the lack of evidence provided by trustees amounted to “misconduct in the administration of the charity”, leading to “concerns about a possible breach of the trustees’ duty to comply with the charity’s governing document and the law”.

“The commission’s concerns were so serious, particularly given the previous compliance inspection, that the commission has exercised its legal powers to direct under section 84 of the Charities Act 2011 that the trustees undertake specific actions and address other regulatory concerns identified from the visit,” the regulator said.

“These include concerns around late filing of statutory returns and a sizeable section of the charity’s assets being loaned to two members of the local community.”

The initial investigation into the charity closed last Wednesday and the charity was placed under “immediate monitoring to ensure compliance with the terms of the direction”, the regulator said.

The Ipswich Kurdish Islamic Cultural Centre was approached by Civil Society News for comment but did not respond by the time of going to press.