(CNN) -- UK police dropped their case Wednesday against the brother of a British-Iraqi man who was killed with his wife, mother-in-law and a French cyclist in a mysterious attack in the foothills of the French Alps.
The bodies of Saad al-Hilli, his wife Ikbal and her mother, Suhaila al-Allaf, were found in a car in a secluded parking lot on the outskirts of Chevaline, an Alpine village near the picturesque Lake Annecy, in September 2012. French cyclist Sylvain Mollet was found shot dead close by.
The couple's two young daughters survived the attack, although one was beaten and shot. The other hid for hours behind her dead mother's skirts and was unharmed.
Saad's brother Zaid al-Hilli, who lives in the county of Surrey, southwest of London, was arrested in June last year on suspicion of conspiracy to commit murder.
He was later released on bail, but Surrey Police said Wednesday that the 54-year-old's bail had been canceled since he could not be charged.
"At this stage there is insufficient evidence to charge him with any criminal offence and no further police action is being taken at this time," the force said in a statement.
The French-led investigation into the murders continues, Surrey Police said, adding that British officers had carried out "exhaustive" inquiries in the United Kingdom as part of the joint probe.
Annecy Prosecutor Eric Maillaud told CNN the French investigators agreed with their British counterparts that there was not enough evidence to pursue the case against Zaid al-Hilli.
Nonetheless, he "remains one of the main suspects in the case," Maillaud said. Investigators suspected that financial issues between the two brothers might have been a motive.
The team continues to work on the case, Maillaud said.
"There are still important leads in Iraq but we cannot go out and work there so it's on standby," he said. "The other one is industrial espionage with state participation and that is still under investigation."
Born in Baghdad in 1962, Saad al-Hilli was a naturalized British citizen who had lived in the United Kingdom for decades.
He was an engineer working at Surrey Satellite Technology, a high-tech company owned by EADS, an aerospace corporation that builds satellites.
The family lived in the well-heeled town of Claygate, in Surrey, but was vacationing in France. Ikbal's mother lived in Sweden.