John "Goldfinger" Palmer, who allegedly amassed a huge fortune in a time-share scam, was treated for a cardiac arrest on 24 June at his home in South Weald.
But a post-mortem examination on 30 June revealed the 65-year-old convicted conman had been shot in the chest.
Essex Police had initially referred the case to the IPCC.
An IPCC spokesman said: "Following an assessment of the evidence provided, it has been recommended that the matter should be investigated locally by the police force.
"This decision is based on the fact that there was no evidence of immediate police contact with Mr Palmer before his death, or identifiable conduct issues from the officers who attended the scene that would require the ongoing involvement of the IPCC.
"If any conduct issues are identified in the course of the local investigation, we would expect Essex Police to re-refer these for further assessment, which is in line  with the usual process."
The case of a notorious criminal shot dead in his home has been referred back to Essex Police by the Independent Police Complaints Commission (IPCC).