Gardaí are to investigate allegations a member of the Garda Síochána Ombudsman Commission attended a party with Gerry Hutch.
Justice Minister Simon Harris has received a report from GSOC on the issue, and it has been referred to Gardaí to establish if any concerns of a criminal nature arise.
Minister Harris has said he believes this is "the appropriate course of action" to ensure public confidence is maintained in GSOC.
— Department of Justice 🇮🇪 (@DeptJusticeIRL) April 24, 2023
The inquiry is being conducted by the Garda National Bureau of Criminal Investigation.
In a statement, GSOC said: "When GSOC became aware last week of a potential conflict of interest involving a member of our staff, we immediately removed that member's access to our systems and commenced an initial internal investigation.
"The staff member in question resigned shortly thereafter".
GSOC said it engaged "at a senior level" with the Department of Justice and An Garda Síochána, and continues to do so.
"We took these steps promptly in response to the disclosure of a potential conflict of interest so as to preserve the integrity of our systems and facilitate proper investigation of all matters relating to this.
"It is not GSOC's policy to investigate itself and we see independent investigation as integral to proper oversight, due process and fairness," it added.
The move follows calls for an independent inquiry into the incident.
Labour spokesperson for Justice, Aodhán Ó Ríordáin, earlier said the allegation was too serious for GSOC to handle by itself.
“We can't have GSOC investigating themselves,” he said.
“We need an outside agency; I’ve suggested either a retired judge or a Senior Counsel to look over the facts, to look over this instance and to see what [lessons] can come from it because certainly there’s a huge amount of disquiet over it".
Gerry Hutch walked free from the Special Criminal Court last week after he was found not guilty of the murder of David Byrne.