Israeli security authorities questioned staff members at five Palestinian institutions in eastern Jerusalem this week about their sources of income and possible connections to the Palestinian Authority.
The inquiry resulted from reports from Oslo that said officials were investigating whether money donated to the Palestinian Authority for infrastructure projects had been used to purchase property and assets in Jerusalem.
Several million dollars given to the self-rule government have been used in this manner, Israel Radio reported.
The money had been donated to a fund named after the late Jorgen Holst, the Norwegian foreign minister who helped facilitate the Oslo peace accords.
Officials in Norway were concerned that people would be discouraged from making donations if the reports prove to be true.
Meanwhile, several police investigators reportedly had questioned directors of Palestinian centers about their activities.
The head of an economic research center in Beit Hanina was one of the directors. He said he refused to give the police any documents, and would only do so if presented with a warrant.
The director said the center, established in 1963, was licensed to operate and not involved in any political activities.
Earlier this year, the Knesset passed legislation barring the Palestinian Authority from conducting any official activities in Jerusalem.