A Moscow court on Monday fined the prominent Sakharov Centre, a human rights group seeking to preserve the legacy of a Nobel Prize-winning Soviet-era dissident, for failing to declare itself a "foreign agent".
The organisation was slapped with a 300,000-ruble ($5,100) fine for not registering under a controversial law signed by President Vladimir Putin in 2012 as part of a broader crackdown on rights activism.
The law forces non-governmental groups who receive funding from abroad and carry out political activities to use the "foreign agent" tag on all their paperwork and to undergo more intrusive checks.
The label has enraged rights groups due to its connotations of Cold War espionage.
The term "foreign agent" was used in the Stalin era against the dictator's opponents. Later in the 1970s and 1980s, the Soviet authorities used it against dissidents who were accused of being on the West's payroll.
The Sakharov Centre's director Sergei Lukashevsky called the court case "absurd", vowing to appeal the decision and denying the organisation does any political work.
Opened a year after rights campaigner and nuclear physicist Andrei Sakharov died in 1989, the centre includes a museum which gives information about Soviet-era repressions, hosts a research library and stages lectures and exhibitions.
Earlier this month the centre provided the venue for the lying-in-state of murdered Russian opposition politician Boris Nemtsov, with mourners including former British prime minister John Major.
"We want to go through the whole judicial process so as to have the opportunity to then go to the European Court (of Human Rights), since we consider the hearing was not fair and our rights were breached," Lukashevsky said.
"We have received funding from abroad but we do not recognise that we have carried out political activity," the director added.
"Our activity is educational. It's about informing people and creating conditions for free public discussion."
The contentious law has already affected Russia's leading rights group Memorial, as well as a branch of the Norway-based Bellona environmental campaign group in the northern city of Murmansk.