The player, Tyson Keats, appeared in 10 matches whilst not holding Effective Registration with the Rugby Football Union.
The case was heard by an RFU Premiership Regulations Panel of Inquiry consisting of Jeremy Summers (chairman), Mark McCafferty and Peter Budge.
London Welsh have 14 days in which to appeal against the decision.
London Welsh's former rugby manager Mike Scott is also the subject of a separate RFU disciplinary hearing relating to Keats' registration.
He has been charged under RFU Rule 5.12 for "conduct prejudicial to the interests of the Union or the Game". Scott's case will be heard at a later date.