The ICC today issued a media release stating that Rauf had been removed from the panel of umpires for the June 6 to 21 tournament.
"The decision has been made after media reports on Wednesday indicated that the umpire was under investigation by Mumbai Police," the ICC release said.
Explaining the decision, ICC Chief Executive David Richardson said: "In the wake of reports that the Mumbai Police are conducting an investigation into Asad Rauf's activities, we feel that it is in Asad's best interests as well as those of the sport and the event itself, that he is withdrawn from participating in the ICC Champions Trophy."
As per the duty schedule of the on-field umpires, Rauf was supposed to officiate in a warm-up match between Australia and West Indies in Cardiff on June 1.
In the tournament group league stage, he was supposed to officiate in two matches in Cardiff. The first on June 9 was between Sri Lanka and New Zealand while other was between West Indies and South Africa.
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