(CNN) - The House Ethics Committee will formally investigate whether Rep. Michael Grimm violated any of its rules.
But the panel said it would defer its action for now at the request of the Justice Department, which is prosecuting the New York Republican.
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Grimm pleaded not guilty last month in Brooklyn to charges of filing false tax returns, mail fraud, wire fraud, hiring unauthorized aliens and perjury.
Federal prosecutors say he failed to report $1 million from his restaurant business in Manhattan before he was first elected to Congress in 2010.
The ethics panel had already been conducting a preliminary review of the Grimm matter, but the case rises to a new level with the establishment of a formal probe.
Grimm has stepped down from his post on the House Financial Services Committee, but said he will remain in office and predicted he would be "fully exonerated."
He is running for a third term in his Staten Island district.