The Frankfurt prosecutor's office said the inquiry had been started after a large number of his employees had reported income on which they had not paid taxes.
The German tax authorities had also given information.
Mr Schneider is being investigated for falsifying documents after complaints by his principal bank, Deutsche Bank.
The prosecutor's office could not confirm reports in a German newsletter that Mr Schneider had transferred DM242m ( pounds 96.58m) to accounts in the Bahamas through banks in London.
Suggestions that he had used London banks to launder his money were rebutted by British banking sources, although they admitted it was highly likely the funds had passed through London.
They said it was unlikely transfers by the head of a large German company would be caught by regulations designed to prevent the conversion of stolen money or drugs proceeds into legitimate bank deposits.
Reporting procedures to catch money launderers were not aimed at preventing large-scale fraud perpetrated through banks, sources said.
The German investigators are nevertheless expected to trace Mr Schneider's millions through the banks that transmitted it abroad.Reuse content