The charity educates the public about the Normandy landings in June 1944, maintains related public memorials and provides grants to charities that support the armed forces community.
The regulator is examining the charity’s financial controls, fundraising practices and the extent to which its funds are applied for charitable purposes.
The inquiry, which was opened on 14 April, will investigate the administration, governance and management of the charity by the trustees, the commission said today.
The scope will include whether they are exercising reasonable care over its fundraising activities, taking steps to ensure compliance with relevant legislation and the charity’s governing document, and taking steps to ensure the charity’s procedures and controls are sufficient.
The commission said it had used its legal powers to freeze the charity’s bank accounts while it investigated its concerns, but had not stopped the charity from fundraising.
The commission said in a statement that while the inquiry was being conducted "the public can continue to have confidence that their donations will be used for the benefit of the armed forces community as intended".
The commission said it had specified to the charity that a range of controls must be put in place for its fundraising collections, including The Forces March, which is due to start on 20 May.
The charity’s latest accounts on the Charity Commission’s website show it had an income of £153,781 and spent £157,248 for the period to 31 December 2013.
Third Sector left a message on The Veterans Charity’s answerphone this morning but did not receive a reply.