Israel's domestic security agency said Thursday they have investigated 20 Israelis, including former defence industry personnel, for allegedly making and selling cruise missiles to an unnamed Asian nation.

The suspects are also suspected of money laundering, the Shin Bet said, with its investigation report handed to the justice ministry for possible prosecution.

"The suspects were engaged in illegally developing, manufacturing, testing and selling armed cruise missiles to an Asian country," a Shin Bet statement read.

"The suspects received instructions from elements associated with the same foreign country, in exchange for payment of considerable funds, as well as other benefits," it added.

Photos released by the Shin Bet showed a missile being constructed, as well as communication and navigation equipment seized during tests in central Israel.

A video issued by the Shin Bet shows what appears to be the launching of a missile by a number of men near two parked cars, with the year 2019 appearing in the top of the video.

According to the Shin Bet, the Israeli suspects not only illegally manufactured and sold missiles, but also tried to hide the final destination of the weapons.

It said the affair showed the "potential damage" caused to Israel by such actions, "including the concern that such technology could reach countries hostile to Israel."