Domenico Scala, head of FIFA's Audit and Compliance Committee, said that although preliminary investigations had not established any connection between the allegations and Canover Watson's role in football, Watson had been relieved of his duties while the investigation continues.
"After a preliminary clarification of the facts of the case and the allegations of the Cayman Island investigating authorities against Canover Watson, no connection with football and/or his role at association level has been established at this stage," said FIFA in a statement.
"The investigation continues. The chairman has decided to temporarily relieve until further notice Canover Watson, to whom the presumption of innocence applies, of his duties on the FIFA Audit and Compliance Committee.
"This should not be regarded as routine procedure, because cases like this or of this nature must always be assessed on their individual merits."
Watson, one of eight members of the committee and a vice-president of the Caribbean Football Union, has denied the charges and been released on bail in the British overseas territory.
The allegations refer to Watson's time at the head of Cayman's Health Service Authority and follow a police investigation into the introduction of a swipe card system.
Cayman Islands Anti-Corruption Commissioner David Baines, in a statement to local media, said that Watson was suspected of "breach of trust contrary to section 13 of the Cayman Islands Anti-Corruption Law, as well as abuse of public office... and conflict of interest".
Baines also cited "suspicion of money-laundering contrary to section 133 of the Proceeds of Crime Law" in the Watson case.
(Reporting by Brian Homewood; editing by Sudipto Ganguly)
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