The SFO has been investigating the unit, responsible for many of the derivatives trades that nearly brought about AIG’s demise two years ago, for the past 15 months.
The London-based division of the business was blamed for writing off billions of dollars worth of mortgage backed securities.
According to reports, suspicions were raised in 2008 of fradulent actvities within the unit. AIG was brought to the brink of collapse before being salvaged by a £105bn bailout from the US Federal Reserve.
The news comes less than a week after US authorities dropped their own separate inquiry into AIG Financial Products, which was wound down during the financial crisis, due to lack of sufficient evidence.
An SFO spokeswoman says: “I can confirm the SFO has discontinued its investigation into the UK operations of AIG Financial Products Corp as it has concluded that there is insufficient evidence to bring a prosecution in the Crown Court.”