Jose Socrates, who led Portugal’s centre left government from 2005 to 2011, was arrested on November 21 as he flew into Lisbon airport.
The former leader is one of four people detained as part of a probe into money-laundering and bribery.
The announcement comes in the wake of several other ongoing corruption investigations in Portugal.
Jose Socrates was held overnight and is expected to be questioned on November 22.
A statement from the attorney-general’s office said prosecutors had carried out searches at several locations, aided by 70 tax and police officers.
It said the investigation is into banking operations and transfers “without known justification or legal admissibility”.
It also stressed it was a separate from a long-running investigation into tax fraud in which several public figures have been caught up.
The development also comes just days after Portugal’s Interior Minister Miguel Macedo resigned following another investigation into alleged corruption linked to the allocation of residence permits.
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