Madonna could be banned from returning to Russia - after she spoke out in support of gay rights and the feminist punk group Pussy Riot.
The singing superstar performed two shows in Moscow and St Petersburg last August as part of MDNA world tour, and while on stage took the chance to voice her opinions on gay rights and backed the Pussy Riot singers jailed for a protest against President Putin.
Now the foreign ministry has ruled that Madonna's visa did not allow her to make money during her visit to the country, Russian newspaper Izvestia reported.
The singer faces a fine of up to £10,445 and could be refused future visas to enter Russia.
Officials responded to a claim by St Petersburg legislator Vitaly Milonov, that her concert constituted "illegal commercial activity."
The foreign ministry said in statement that Madonna failed to obtain a work permit, adding that since the singer was invited by the culture ministry on a single-entry three month visa, the purpose of her visit should have been limited to "cultural ties".
Milonov said: "Those who applied for a visa for Louise Ciccone [the singer's birth name is Madonna Louise Ciccone] face a fine of 500,000 rubles. It has to be determined whether she filed the documents herself.
"The question of the legality of Madonna's visit to our country will also come up, and next time it will be a lot more difficult to get a visa."
But since Madonna was on tour, and not hired to give the performance, there is no contract that could serve as the basis of a work visa.
Yevgeny Finkelshtein, the president of tour organisers PMI said: "All over the world, there is such a concept as an artist's visa. The work visa that Milonov was insisting on would take half a year to obtain and would require a work contract."
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