The focus is on five loans worth "tens of millions of dollars".
At the centre of the investigation is whether disclosure of the loans could have made South Canterbury Finance ineligible for inclusion in the Government's retail deposit guarantee scheme.
This cost the taxpayer $1.775 billion in payouts to South Canterbury Finance investors.
SFO chief executive Adam Feeley said yesterday, when contacted, the loans, spanning five years to 2009, "may have involved false statements or other fraudulent conduct".
While fraud has not yet been found, "dozens" of other loans might also need scrutiny.
South Canterbury Finance founder Allan Hubbard declined to comment yesterday on the SFO announcement.
It is believed several South Canterbury Finance companies and individuals will be scrutinised by the investigators.
South Canterbury Finance collapsed on August 31 and was placed in the hands of receivers after failing to recapitalise itself, triggering the Government to inject $1.775 billion to repay 35,000 investors and creditors under the emergency Crown retail deposit guarantee scheme.
The final tranche of payments of a total $1.6 billion to investors is unaffected by the SFO investigation and are scheduled to be sent out today.
Long-term supporters of Mr Hubbard, who is in separate statutory management alongside 13 trusts and business entities and who is also subject to an earlier separate SFO investigation into Aorangi Securities Ltd, have been incensed over the statutory management.
StandByHubbard website founder Paul Carruthers yesterday welcomed the SFO investigation, believing it signalled other managers, aside from Mr Hubbard, would be investigated.
"If others have got their hands dirty, they should have to be subjected to the same scrutiny as Allan [Hubbard]," Mr Carruthers said.
"If fraud has occurred, it needs to be looked at . . . I don't believe you will find it [fraud] with Allan," he said.
Had South Canterbury Finance not been included in the extended scheme in early April, it would have gone into receivership.
In general, South Canterbury Finance's related party lending has been a major issue for the company during the past two years.
That lending will include loans between SCF and businesses and trusts associated with Mr Hubbard, and are the most complex element of the unravelling and eventual collapse of SCF.
Mr Feeley said it was not criminal to have the same people on the board or management of a lender, and also on the board or management of the borrower.
However, if the related party loan was not on commercial terms or made in the ordinary course of business, it could potentially be fraudulent, he said.
The SFO was made aware of the loans in talks with "several senior people".
In late August, when the Government placed Mr Hubbard and several of his business entities into statutory management - which did not include South Canterbury Finance - the SFO also launched a separate investigation into Aorangi Securities Ltd for "potential breaches of the Crimes Act".
Mr Feeley said, following inquiries by its recently established fraud detection unit, the SFO now had "grounds to suspect that a number of related party transactions involving South Canterbury Finance may have involved false statements or other fraudulent conduct".
The SFO's earlier inquiry into Aorangi Securities was separate to the South Canterbury investigation.
The SFO investigation into Aorangi Securities may be completed within two months.
