USAID, America's national aid agency, challenged Islamic Relief Worldwide to provide reports on its governance reform and purge officials engaged in promoting extremism.
In a letter to the leader of IRW, which is banned for its terror links in the UAE, assistant administrator of USAID Frederick Nutt said the charity would face compliance procedures.
It was forced to report on its progress in overhauling its operations and its co-operation with a formal investigation for compliance carried out by the UK Charity Commission. It faces a demand for monthly submissions to the US government, which has routed humanitarian aid through the UK body.
In a response to the US government over its concerns on anti-Semitism in its ranks, IRW said it would implement the findings of an inquiry by a former UK attorney general, as well as the Charity Commission findings, which have been delayed for months.
Sigrid Kaag, the Netherlands' Minister for Foreign Trade and Development Co-operation, said on Tuesday that she would block any further release of government funds to the organisation, which was one of four charitable groups that had submitted an application to distribute more than 37 million euros ($44.8m) in a January tender.
Ms Kaag said she had learnt in December of the allegations linking IRW to the Muslim Brotherhood. "Based on this information, I have decided not to subsidise Islamic Relief Worldwide," she said.
Lorenzo Vidino, an extremism expert at George Washington University, revealed last year that founders and leading trustees of IRW were posting messages online filled with hate against Jewish people, as well as political statements supportive of the Muslim Brotherhood.
After Mr Vidino's research was published, the organisation promised to replace its board and modernise its structures. However, many of its power brokers and their associates remained in office.
Senior employees at IRW repeatedly used social media without safeguards against extremism, and an IRW employee allegedly promoted a conspiracy theory claiming the American billionaire Rockefeller family planned the coronavirus pandemic 10 years ago.
Hany El Banna, the charity's founder, called members of the oppressed Yazidi community of Iraq "devil worshippers" in a lecture he posted online, drawing criticism from the Nobel Peace Prize winner Nadia Murad.
Germany announced that it would stop providing funds to the German branch of Islamic Relief because of its suspected ties to the Muslim Brotherhood, while the US Department of State also sounded the alarm.
