The Evans Kidero foundation has been de-registered over financial irregularities.
NGO board executive director Fazul Mahamed said the foundation breached several sections of the Non-Governmental Organisations Coordination Act.
"Your organisation has breached the provisions of regulation 24 read together with clause 5 of the terms and conditions attached to your registration certificate by failing to file annual returns," reads the letter from Mahamed.
The foundation is also said to have opened and operated unauthorised bank accounts.
Mahamed advised the asset recovery agency to audit all assets under the foundation.
"The Central Bank of Kenya, the Financial Reporting Centre and the Family Bank Kilimani branch are advised to preserve all funds held under the Evans Kidero Foundation until further communication from this office," the letter continues.
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The NGO boss noted that several senior employees of Nairobi county government were beneficiaries of the foundation, having received funds directly from the foundation's Family Bank account.
"It is not clear why county government employees should receive any funds from the foundation. There are also several unexplained cash deposits amounting to millions of shillings made to the foundation from several companies that require further investigations," Mahamed added.
The NGO coordination board suspended the entire board of the Evans Kidero foundation in December last year, following claims that it receives monies into its bank account from suspicious sources.
The NGO regulator added that the foundation last filed annual returns in 2013.
The Evans Kidero Foundation was registered in October 2012.