Foreign donations to political parties in Northern Ireland will not be banned, and the names of donors may be withheld from publication under an exemption in the British government's White Paper on political funding.
A clause in the draft legislation enables the Northern Ireland Secretary, by order of exemption, to withhold the amounts and source of foreign donations to political parties from public scrutiny, subject to review.
However, all the Northern parties will be required to make returns of donations above £5,000 sterling to the Electoral Commission, but their publication can be denied for five years and renewed thereafter under the proposed exemption.
The legislation also proposes that Irish citizens making donations will be exempt from publication providing the donor complies with the (Irish) Electoral Act, 1997. An exemption order can be granted for five years, subject to review, and can be renewed by the Northern Ireland Secretary.
The British government intends that any exemption to the legislation for the Northern parties "should be as limited in its effects as possible" and not necessarily "automatic", but it clearly intends to assist in reducing circumstances of intimidation or discrimination.
Sinn Fein, which has received up to £2 million sterling in donations from the Republic and the US in recent years, had expressed its opposition to any changes in legislation on party funding, citing its position as an "all-Ireland party".
The SDLP also opposed any restriction on donations, particularly from the Republic and the US, arguing it would be unreasonable to limit the development of political funding in the North.
Presenting the draft Political Parties, Elections and Referendums Bill in the Commons, the Home Secretary, Mr Jack Straw, said the reform was designed to provide greater honesty and openness in the political system.
The draft Bill includes provisions to prohibit the acceptance of donations to political parties in Britain from foreign donors unless they are registered as voters in Britain or can be sourced from registered companies, trade unions or associations operating in Britain.