France's far-right Front National could be investigated by the EU's anti-fraud squad, the European Parliament announced.
It is alleged that Marine Le Pen's party is paying 20 party members salaries from the EU budget to work as assistants who do no work directly connected with the European parliament.
Le Pen said she would file a complaint against the parliament's president over the "false accusations", and accused French Prime Minister Manuel Valls of "mobilising his socialist friends against the National Front".
The European parliament announced that EU president Martin Schulz, a German socialist, had formally notified the EU anti-fraud office, OLAF, to irregularities in salaries paid to Front National employees.
It is alleged that employees worked in the party's Paris headquarters, and were not listed as MEP assistants on Front national documents.
The Front National is currently leading in opinion polls ahead of the French local elections on March 22 and 29.
On Sunday, Valls said on a French television that he was "afraid" for France because of the rise of Front National, and that the country risked being "smashed apart" by it.
"It's a huge political manipulation," said Le Pen, reports AFP.
"We have nothing to reproach ourselves for, in this or any other area."
Schulz denied that his actions were politically motivated, and said it was "purely administrative".
"One cannot be paid by the European parliament and work for a party," he said.
OLAF will asses the evidence before deciding whether to launch an official investigation, said a spokesman for the organisation.
Front National, which claimed first place in the European elections in France in 2014, currently has 24 MEP's and has campaigned on an anti-EU, anti-immigrant platform.