U.S. regulators are closer to discovering what happened to an estimated $600 million in missing customer money tied to bankrupt brokerage MF Global, but the search continues, an official said on Tuesday.

We're closer than when we first went in there, Bart Chilton, a Democratic commissioner at the U.S. Commodity Futures Trading Commission, told Reuters Insider.

The money is not where it should be. I think something nefarious has happened, potentially something illegal, he said.

U.S. regulators are undertaking a sweeping review into the business practices of failed futures brokerage MF Global as they search for missing customer money.

The CFTC has started a formal investigation into MF Global and issued subpoenas. The FBI also has shown a preliminary interest in regulatory probes looking into the missing funds.

An MF Global representative was not immediately available for comment.

Neither MF Global nor its former head Jon Corzine has been charged with any wrongdoing.

There are growing concerns that regulators may be unable to find the missing customer funds, at least in a state where it can be paid back to creditors.

The CFTC said last week it would do an audit of all clearing futures commission merchants to ensure customer funds were properly segregated.

(Reporting by Alexandra Alper with additional reporting by Christopher Doering; Editing by Lisa Von Ahn and Andrea Evans)