The Federal Bureau of Investigation (FBI) searched the homes of Raphel and also her State Department office, which has been sealed, according to media reports.
At the time of raids, she was an advisor on Pakistan in Office of Special Representatives for Afghanistan and Pakistan at the State Department. Her contract with the State Department expired last week.
It is unclear whether she is the target of the investigation, or what agents were searching for.
"We are aware of this law enforcement matter. The State Department has been cooperating with our law enforcement colleagues," State Department spokesperson Jen Psaki said.
In 1993, she was appointed as America's first Assistant Secretary of State for South and Central Asian Affairs.
She later served as the US Ambassador to Tunisia and in the 2000s, was appointed to or held a number of official positions related to her expertise on South Asia.
She was also posted in Britain and India.
According to The Washington Post, which first reported about it, US officials acknowledged that the FBI conducted a search at Raphel's home on October 21 but would not provide details of the search.
Agents removed bags and boxes from the home, but it is not clear what was seized there or at her office.
After her retirement and before returning to the State Department, Raphel worked as a lobbyist for Cassidy & Associates, a Washington-based government relations firm.
She represented Pakistan, Equatorial Guinea and Iraq's Kurdistan Regional Government, according to federal disclosure forms.
"Espionage cases involving State Department officials are relatively rare," the daily reported.
Because of her stand on Kashmir and pro-Pakistan leanings, Raphel was extremely unpopular in India.
In his book 'Diplomatic Channels', former Indian Foreign Secretary Kris Srinivasan, released in 2012, wrote that RAW snooped on a telephone conversation of Raphel which confirmed that the US would not back a draft resolution against India on Kashmir moved by Pakistan at the United Nations, and therefore it would fail to proceed any further.
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