Guns on the Street, shown in the network's Undercover Britain series the day after the Dunblane massacre in March 1996, purported to be the video diaries of two people in Salford and Moss Side concerned about the illegal arms trade.
The film led to the arrest and conviction of Gary Bispham, seen in the programme illegally reactivating an Uzi sub-machine-gun. He is serving seven years for firearms offences.
Bispham has said some scenes were stunted and the producers failed to disclose that one diarist had a conviction for firearms offences and the other was a freelance journalist.
Channel 4 set up an independent investigation of the documentary by outside solicitors. This has nearly finished, said a spokesman.
Channel 4 accepted that one diarist had a gun-related conviction, but said it had been unaware of this before the broadcast.
This is a sensitive time for factual programme-making.Carlton was fined pounds 2m for its faked drugs documentary The Connection, and deception was found in The Vanessa Show.
Last year Channel 4 escaped punishment after apologising for a Cutting Edge film called Rogue Males, about cowboy builders, which merely filmed reconstructions of incidents.
Last month the ITC fined the network pounds 150,000 for a documentary Too Much Too Young: Chickens, where producers posed as clients picking up rent boys.
The independent producer Mary Devine has been banned from the network.Reuse content