VW has also launched an internal inquiry.
With VW recalling almost 500,000 cars in the US alone, it has set aside €6.5bn (£4.7bn) to cover costs. The carmaker has said it will begin recalling cars in January.
But that's unlikely to be the end of the financial impact. The EPA has the power to fine a company up to $37,500 for each vehicle that breaches standards - a maximum fine of about $18bn.
Legal action from consumers and shareholders may follow, and there is speculation that the US Justice Department will launch a criminal probe. Then, or course, there is the cost of fixing all the cars.