SNP MEP Alyn Smith has issued an apology to Brexit Party chairman MEP Richard Tice over claims he made about the party's source of funding.
In an interview on Sky News in May ahead of the European election, Smith accused the Brexit Party of being a "a shell company" that was a "money laundering front".
Following the interview, lawyers acting for Tice demanded compensation over the claim and called for an apology to be read out in the High Court for alleged defamation.
In a letter published by his solicitors, Smith said that he had agreed to pay a sum in damages and legal costs, as well as issuing an unreserved apology to Tice.
In his statement, he wrote: "On 27 May 2019 I was interviewed by Sky News. In that interview I stated in the context of political donations that the Brexit Party is a 'shell company that's a money laundering front'.
"Its Chairman, Richard Tice, is concerned by implication this allegation related to him, although that was not my intention.
"Having reflected upon this following a complaint from Mr Tice, I apologise unreservedly to him and withdraw my allegation.
"I am happy to state clearly that I do not have any evidence to support such an allegation.
"I spoke in the heat of the moment and I am happy to set the record straight.
"I have agreed to pay a sum in damages to the Help for Heroes charity and I have agreed to pay legal costs."
Tice said that he would not hesitate to take action over false claims regarding the Brexit Party.
"I am pleased that Alyn Smith has now apologised and withdrawn these wholly unfounded and damaging allegations," said Tice.
"People are entitled to take a different view of Brexit and I respect their right to do so. But I will not hesitate to take action against those who make false claims about the Brexit Party and by implication those of us who run it."
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