WASHINGTON (CNN) -- The allegations bearing down on New York's governor didn't start with a prostitute -- despite lurid details in a federal affidavit detailing an alleged tryst with a "very pretty brunette" named Kristen last month.
As New York attorney general, Eliot Spitzer, seen in 2004, was known for tackling corruption.
Rather, sources familiar with the investigation said Tuesday that Gov. Eliot Spitzer's troubles began with a federal money-laundering probe.
Prosecutors unsealed an affidavit that details a rendezvous in a Washington hotel room between a prostitute and "Client 9," who a source with knowledge of the case said Monday was Spitzer.
Spitzer, who has not been charged with any crime, stood beside his wife, Silda, on Monday, apologizing to his family without specifically mentioning accusations of a romp with a high-dollar prostitute. Watch Spitzer's vague apology »
The governor -- who has three daughters and who rose to prominence as a hard-charging prosecutor with little tolerance for graft and corruption -- said only that he had acted "in a way that violates my obligations to my family, that violates my or any sense of right and wrong." Timeline of political sex scandals »
He did not acknowledge the allegations, which were revealed in The New York Times, nor did he take questions.
According to two sources who spoke Tuesday with CNN, Spitzer hit the federal radar when a bank reported to the Internal Revenue Service that a significant amount of money had been suspiciously transferred from one account to another.
The IRS, upon investigating the matter late last year, found that the accounts were connected to Spitzer, the sources said. The IRS contacted the FBI, which joined the case to investigate the possibility of government corruption.
Federal law requires a banking institution to file a Suspicious Activity Report when the institution suspects a transaction is linked to a federal crime.
More specifically, the banks are required to report to the IRS any transactions totaling $5,000 or more if the transactions "involve potential money laundering or a violation of the Bank Secrecy Act." The act requires businesses to keep documents that are useful for identifying and investigating money laundering.
After receiving the IRS report last year, the FBI Corruption Squad linked the account transfers to a prostitution ring, according to sources. The FBI criminal division joined the probe to look into the prostitution ring, while the federal corruption team continued its investigation into Spitzer.
Besides high-profile Wall Street investigations as state attorney general, Spitzer also prosecuted prostitution rings. See Spitzer's top case, controversies »
Two officials said it appears that the main motivation for the money transfers was to hide money. Watch whether Spitzer could avoid charges by resigning »
Sources said Spitzer allegedly was moving money between several of his own accounts, and investigators think he may have been shuffling money to hide his behavior from his wife.
Ultimately, the money in question ended up in the bank accounts of shell companies linked to the prostitution ring, the sources said.
The prostitution ring, known as the Emperors Club, charged between $1,000 and $5,500 an hour and operated in several major cities besides New York, according to court papers.
The source who identified Spitzer as Client 9 said Monday that the governor's attorneys likely will face questions about how he paid for the alleged hotel encounter, whether the trail was concealed and whether banking laws were circumvented. He has not yet been formally questioned by authorities, sources said.
The investigation into the Emperor's Club began in October 2007 and included evidence from a confidential source identified in court papers as a prostitute who worked at the club in 2006. The prostitute was given immunity, according to court papers.
The probe also included statements from an undercover officer who posed as a customer, more than 5,000 intercepted phone calls and text messages, more than 6,000 e-mails recovered with search warrants, bank records, travel and hotel records and physical surveillance.
Spitzer has begun assembling a legal team and has tapped Michele Hirshman as his lead attorney, said Madelaine Miller, a spokeswoman for Hirshman's law firm, Paul, Weiss, Rifkind, Wharton & Garrison.
Hirshman, who was the first deputy attorney general under Spitzer when he was attorney general, also is a former assistant U.S. attorney who "served as chief of the Public Corruption Unit, where she led major investigations and prosecutions of government fraud and political and police corruption," according to the law firm's Web site. E-mail to a friend
CNN's Kevin Bohn contributed to this report.
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