This means that magistrates have found sufficient evidence of wrongdoing and the probe can go forward, possibly to trial.
Sarkozy, 63, was released on Wednesday following two days of questioning over alleged illegal financing of his 2007 presidential campaign by the late Libyan leader, Muammar Gaddafi.
Investigators are trying to determine if Sarkozy secretly received 50 million euros ($56.8 million) from Gaddafi's regime for the 2007 campaign in which he defeated the Socialist Party’s Segolene Royal.
This is the first time Sarkozy is being heard in the probe that was launched five years ago. The former French president, who served at the top post between 2007 and 2012, has always denied the allegations against him.
One of Sarkozy's former ministers and a close ally, Brice Hortefeux, was also questioned by police on Tuesday.
French businessman Alexandre Djouhri , a former aide of Sarkozy, was arrested in January in London on suspicion of fraud and money laundering as part of the case and is currently fighting extradition to France.
Judges Serge Tournaire and Aude Buresi have been working on the case involving the ex-president since April 2013 to determine if the 2007 presidential campaign of Sarkozy was the subject of illegal funding from Libya.
In June 2016, French judges ruled that a document claiming Sarkozy was offered 50 million euros ($56.8 million) as an election campaign donation by Gaddafi was authentic.
The document was first revealed by the investigative French news site, Mediapart, in 2012.
In 2016, French daily Le Monde revealed “the existence of a vast criminal system, involving senior officials linked to Sarkozy.
“This network, dedicated to the protection of the former head of state, is composed of police officers or magistrates who remained loyal to the former president, but also businessmen, intermediaries, diplomats and even journalists.”
This organized network had allegedly been set up after the arrival of Sarkozy at the Interior Ministry in 2002, which strengthened further after he entered the presidential Elysee Palace in 2007.
Separately, prosecutors recommended in September 2016 that Sarkozy and 13 others stand trial over an alleged multi-million-euro fraud related to the illegal financing of his 2012 presidential election campaign.