Helsinki Mayor Daniel Sazonov (NCP) said the city would not have granted wage subsidies to the Sun Ray association had it been aware of its links to Moscow.
Helsingin Sanomat over the weekend reported that the city has paid more than 45,000 euros in employment subsidies to the Sun Ray association, which recruits children in Finland for a Russian propaganda summer camp in occupied Crimea.
Sazonov said the city is doing all it can to recover the funds.
"It's repugnant that anyone in this country, through an association or any other entity, recruits children for use in Russia's hybrid influence operations. Not a single euro of public money should be used for this purpose," he said.
The incident has prompted the city to pause all subsidy approvals for the next few weeks while it reviews its internal procedures.
Sazonov noted that, in the case of wage subsidies, the city's assessment has traditionally focused on the jobseeker. But he said the Sun Ray incident demonstrates the need for closer scrutiny of employers as well.
At the moment, according to Sazonov, subsidy applications require mostly general level information.
