Updated

Indian officials were working Tuesday to trace the source of more than a million dollars found in a range of foreign currencies at the headquarters of Tibetan Buddhism's third most important leader in northern India.

Police and revenue officials searched the Gyuto Tantric Monastery and were questioning Ugyen Thinley Dorje, the 17th Karmapa, and his aides about the source of the $1.35 million in currency found over the weekend, monastery official Phuntsok Lama said. It was the second time he was questioned since the raids began.

The raid on the monastery followed the arrest of two Indians who were found carrying 10 million rupees ($220,200) in cash they said had been given to them by a monk with links to Gyuto. The probe has put the Buddhist holy man — seen as one of the Dalai Lama's potential successors — on the defensive and left his aides scrambling to protest his innocence of any wrongdoing.

The raids are unprecedented and particularly surprising since the Karmapa is revered by Tibetans and Buddhists across India. India has gone to great lengths to provide asylum to the Dalai Lama and other Buddhist leaders who have fled Tibet.

Representatives of the Karmapa — who is a member of a different religious order from the Dalai Lama — say the money was part of donations his followers offer when they visit the monastery to seek his blessings.

"Devotees come from Hong Kong, Taiwan, Tibet, from all over the world, and they make offerings in whatever currencies they have. The Karmapa does not even look at these offerings which are handed over to the monastery accounts office," Karma Topden, the Karmapa's spokesman told reporters.

The amounts of cash, however, concerned police, who thought the sums were too large to be merely from donations.

The Karmapa, 24, escaped from Tibet in 2000. Since then, he has been living in the monastery in Sidhbari, just outside the northern Indian town of Dharmsala.

Indian media have been carrying reports that the Karmapa could be a Chinese agent sent to India to become a leader of exiled Tibetan Buddhists who have made their home there. Around $130,000 of the money found at the monastery was in Chinese yuan.

Dharmsala has been the headquarters of the self-declared Tibetan government-in-exile since the Dalai Lama, the 75-year-old Tibetan spiritual leader, fled the Himalayan region in 1959.

China's government reviles the Dalai Lama, accusing him of pushing for independence for Tibet and sowing trouble there. A boy named by the Dalai Lama as the second-highest Tibetan spiritual leader, or the Panchen Lama, in 1995 disappeared shortly afterward and China selected another boy.