Word of Liberal MP Raj Grewal's gambling debts surfaced on police wiretaps in a much broader probe into other people suspected of money laundering and terrorist financing, says a source with knowledge of the events.

Grewal's sudden decision to step down as the member for the southern Ontario riding of Brampton East was prompted by a gambling problem that led him to incur significant personal debts, the Prime Minister's Office said last week.

The source, who requested anonymity due to the sensitivity of the matter, said Grewal's debts came to the attention of the Ontario Provincial Police during an investigation of some "particularly shady guys" who might be involved in laundering drug money destined for an extremist group in the Middle East.

"There are wiretaps up on an organized-crime (and) terrorism investigation. And they have people talking about his gambling debts on the wire," he said.

The source said he learned last spring that the RCMP had asked the OPP's gaming unit about Grewal's casino gambling based on reports of unusually large financial transactions.

"It is literally a collateral issue to a bigger investigation related to drugs, gambling and money-laundering."

Grewal, who is a lawyer, has not been charged with any crime. There is no suggestion he knows anything of the alleged activities at the centre of the broader police probe, the source said.

Attempts to contact him Wednesday for comment were unsuccessful.

The RCMP declined comment, saying it does not confirm or deny the existence of criminal investigations unless charges are laid. The OPP did not immediately respond to an inquiry.

PM Justin Trudeau says that Raj Grewal admitted to a gambling addiction in his resignation letter last week, but says he was not made aware of an RCMP investigation. 0:53

As of early Tuesday, Grewal had not resigned from the House of Commons, though Liberal MP Mark Holland, the government whip, said he understood the paperwork would be filed imminently.

If Grewal does not officially resign soon, he'll be kicked out of the Liberal caucus, said a well-placed insider who was not authorized to speak publicly about the matter.

The federal ethics commissioner began an inquiry last May after two opposition MPs expressed concerns that Grewal might have been in a conflict of interest when he invited a construction executive — who was paying Grewal for legal services at the time — to official events with Trudeau during the prime minister's trip to India this year.

Jeopardizing national affairs

Grewal has said he will co-operate fully with the commissioner's investigation.

The Prime Minister's Office acknowledged last week that the RCMP had made inquiries related to the ethics complaint against Grewal. But the insider said the PMO is realizing only now that the Mounties' questions might actually have been part of a broader investigation.

Conservative MP Gerard Deltell, who served with Grewal on the Commons finance committee, said he had enjoyed working with the Liberal and wished him well personally.

But Deltell added that he hopes Grewal's personal issues have not jeopardized the country's affairs. "That's the main issue we have to address when we talk about it."