City officials in Moab, Utah, say they have launched the probe into the Moab Police Department which dealt with the couple in August, weeks before Ms Petito was killed.
Officers interacted with Ms Petito, 22, and Mr Laundrie, 23, on 12 August after a bystander called 911 to report a possible domestic dispute involving the couple.
City officials acknowledged in a statement that the police department had received criticism and praise for “their response and their resolution of the incident involving Ms Petito and Mr Laundrie.”
“The Moab City Police Department has clear standards for officer conduct during a possible domestic dispute and our officers are trained to follow those standards and protocol,” the city stated.
“At this time, the City of Moab is unaware of any breach of Police Department policy during this incident. However, the City will conduct a formal investigation and, based on the results, will take any next steps that may be appropriate.”
Police pulled over the couple in their white van near the entrance to Arches National Park, and the subsequent interaction was captured on bodycam and written up in a police report.
It has been used to highlight the couple’s stressed relationship in the month before Ms Petito disappeared and her remains eventually found near a remote campground in Wyoming.
The police stop came two weeks before Ms Petito’s final communication with her family, with a witness saying they were concerned at a fight the couple were having.
“We drove by and the gentleman was slapping the girl,” the caller said, according to 911 audio from Grand County Sheriff’s Office.
“Then we stopped. They ran up and down the sidewalk. He proceeded to hit her, hopped in the car and they drove off.”
In the bodycam footage Ms Petito can be seen sobbing and breathing heavily, and an officer tells her that they considered her the aggressor and Mr Laundrie the victim.
No charges were filed against them, and at the suggestion of the officers Mr Laundrie spent the night at a hotel while Ms Petito stayed in the van.
“Both the male and female reported they are in love and engaged to be married and desperately didn’t wish to see anyone charged with a crime,” officer Eric Pratt wrote in the report.
“After evaluating the totality of the circumstances, I do not believe the situation escalated to the level of a domestic assault as much as that of a mental health crisis,” officer Daniel Robbins wrote in the report.
“I then determined the most appropriate course of action would be to help separate the parties for the night so they could reset their mental states without interference from one another.”
Officials said that investigators would now gather all evidence to evaluate the department’s response to the incident.
And they said that all of the information would be made available to any agency investigating Ms Petito’s death and all officers involved would be made available to answer questions.
“We understand that individuals can view the same situation in very different ways, and we recognise how the death of Ms Petito more than two weeks later in Wyoming might lead to speculation, in hindsight, about actions taken during the incident in Moab,” added the city.
“The purpose of the City’s formal investigation is to gather the underlying facts and evidence necessary to make a thorough, informed evaluation of such actions.”
Ms Petito and Mr Laundrie had been on a “van-life” adventure across America when she went missing.
He arrived back at his parents’ home in Florida on 1 September without his girlfriend, and the Petito family reported her missing 10 days later.
Her remains were discovered at the spread creek campground in Wyoming on Sunday, and on Tuesday a coroner determined that she had died from homicide.
Police in Florida continue to search for Mr Laundrie in a 25,000 acre nature reserve in Sarasota County, Florida, after he disappeared from his family home. He has been named as a person of interest by police.