The National Intelligence Service (NIS) has been accused of forging documents -- including Chinese border control records -- to build a spying case against a former Seoul City official who escaped to South Korea from North Korea in 2004.
State prosecutors launched a probe in February when China confirmed that the documents were not authentic, and NIS chief Nam Jae-Joon has come under pressure from politicians and human rights activists to step down.
But the Prosecutors' Office in Seoul said Monday it did not believe the forgery was part of a larger operation orchestrated by the NIS leadership.
The two-month investigation had uncovered no evidence that top NIS officials had been involved, it said.
Charges were however brought against two NIS agents, including Lee In-Cheol who served as a South Korean consul in China's northeastern city of Shenyang.
Another NIS official was inducted two weeks ago.
President Park Geun-Hye called for a thorough investigation last month after an NIS informant linked to the forgeries attempted to commit suicide. He survived and was arrested by prosecutors.
With local elections due in early June, the case has been a politically sensitive one for Park who appointed Nam a year ago.
The spy agency, which has changed titles over the years, had a particularly notorious reputation in the decades of authoritarian rule before South Korea embraced democracy in the 1980s.
The modern-day NIS has also been tainted by a series of scandals, most recently the admission by some agents that they had meddled in the 2012 presidential election.
Nam's predecessor as NIS chief, Won Sei-Hoon, was convicted last month of taking bribes and jailed for two years.
Won faces separate charges over the election meddling scandal, accused of organising an online smear campaign against the opposition party candidate who Park defeated.