Hoyle said Lee used to be a member of a disbanded all-party parliamentary group, Chinese in Britain.
The Chinese embassy in London has denied these accusations. “We have no need and never seek to ‘buy influence’ in any foreign parliament” and we never attempted to do so, said the embassy.
“We firmly oppose the trick of smearing and intimidation against the Chinese community in the UK,” it added.
The security notice said that Lee had “knowingly engaged in political interference activities on behalf of the United Front Work Department of the Chinese Communist Party”.
According to reports, the London-based solicitor donated £200,000 ($275,000, 239,000 euros) to former Labour shadow cabinet member Barry Gardiner, along with hundreds of thousands of pounds to his party.
Gardiner said Christine Lee’s son was formerly his diary manager but resigned on Thursday.
He said that all donations were properly reported and any suggestions of shady money were unrelated to his office and that he has been liaising with intelligence services “for a number of years” about her.
Former Conservative leader Iain Duncan Smith, a vocal critic of Beijing, demanded strong action after Britain’s MI5 warned of Lee’s activities.
“I say, as a member of parliament who has been sanctioned by the Chinese government, that this is a matter of grave concern,” he said.
He questioned why she had not been deported and called for parliament to tighten the accreditation process, which he asserted was too lenient.
British interior minister Priti Patel told reporters that Lee’s behaviour did not meet the criminal threshold for prosecution. However, by issuing the alert the government was able to alert lawmakers regarding Lee’s attempts to improperly influence them, she added.
The fact that a Chinese Communist Party member was targeting legislators was “deeply concerning,” Patel said.
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Lee “facilitated financial donations to serving and aspiring parliamentarians on behalf of foreign nationals based in Hong Kong and China”, said the Speaker’s note, according to British media.
“This facilitation was done covertly to mask the origins of the payments. This is clearly unacceptable behaviour and steps are being taken to ensure it ceases,” it added.
The relationship between the UK and China has deteriorated in recent years due to issues such as Hong Kong and Xinjiang.
Chinese authorities had also sanctioned 10 UK organizations and individuals, including Duncan Smith, for spreading “lies” about human rights abuses in Xinjiang last year.
Last year, the MI5 urged people to view the threat of spies from Russia, China, and Iran with the same vigilance as terrorism.
(With inputs from agencies)