The AIIB was established by Chinese president Xi Jinping in 2016.
As it looks into claims that the Chinese Communist Party controls the Asian Infrastructure Investment Bank (AIIB), Canada has decided to cease any government-led interactions with it.
This move came after the global communications head for Beijing-based AIIB, Bob Pickard,who is a Canadian himself, resigned from his role, claiming that China's ruling Communist Party dominates the bank and uses it to further its interests.
"I have tendered my resignation as the global communications chief of AIIB. As a patriotic Canadian, this was my only course. The bank is dominated by Communist Party members and also has one of the most toxic cultures imaginable. I don't believe that my country's interests are served by its AIIB membership," he wrote in a tweet.
Meanwhile, Canadian Finance Minister Chrystia Freeland did not rule out any outcome of the investigation, a clear hint that Ottawa could pull out of a bank it officially joined in March 2018.
"The Government of Canada will immediately halt all government led activity at the bank. And I have instructed the Department of Finance to lead an immediate review of the allegations raised and of Canada's involvement in the AIIB," Freeland told reporters.
She said that as the world's democracies worked to limit their strategic vulnerabilities to authoritarian regimes, they must be clear about the ways such governments exercised their influence.
"The review I am announcing today is to be undertaken expeditiously. And I am not ruling out any outcome following its completion," she said.
Freeland's remarks mark a new dip in bilateral relations with China, which have been frosty for the last five years.
The Royal Canadian Mounted Police said on Tuesday it was investigating allegations China tried to intimidate a federal Conservative legislator.
Canada has accused China of trying to interfere in its affairs through various schemes, including illegal police stations and the targeting of lawmakers. Beijing denies all such allegations.
(With inputs from agencies)