The Ministry of Defence has confirmed a file of evidence involving allegations connected to small arms has already been passed to military prosecutors who are currently deciding whether further action should be taken.
The allegations focus on claims that soldiers have been accused of smuggling guns out of Iraq with the intention of trying to sell them for cash or drugs.
It is understood the number of soldiers from the Yorkshire Regiment allegedly involved is in the high single figures. The investigation has been running since earlier this summer.
A Ministry of Defence spokesman said: "The MoD can confirm that the Royal Military Police has carried out an investigation involving small arms.
"Any allegations like this are taken very seriously. The Army Prosecuting Authority is currently considering the case."
The MoD would not comment on whether civilian police forces have become involved to investigate what happened to any guns that have been smuggled out of the army.
Figures released by the MoD earlier this year showed 520 soldiers had tested positive for class A drugs in 2005 and 460 for class C drugs, both up substantially from the previous year.