The couple’s organisation Sussex Royal will be examined by charity officials after it was shut down last year following their move to the US.
The UK’s Charity Commission is conducting a review of Prince Harry and Meghan Markle’s former charity.
Sources told The Telegraph the watchdog is investigating how Sussex Royal was run and whether it complied with charity law.
It was shut down last July following the couple’s move to America.
The Commission’s review is not a formal investigation, but it can initiate one if it finds evidence of wrongdoing, which it has not yet concluded.
A Charity Commission spokesperson said: “Our regulatory compliance case is ongoing. We cannot comment further.”
The Commission had launched a probe last year into after campaigners complained to the Commission about “inappropriate use of funds”.
Both Harry and William faced a an investigation into the alleged misuse of nearly £300,000 (AU$539,000) of charity money, including a large sum given to the Sussexes’ former UK charity.
They were reported after funds were paid to Harry’s eco-friendly travel firm Travalyst.
The Charity Commission was urged to look into possible conflict of interest, inappropriate use of funds and lack of independence.
At the time, the Commission said it was assessing information in the complaint to decide whether to investigate further.
But it deemed the transfer of money as appropriate and a spokesperson said they had “not made any determination of wrongdoing”.
William and Kate’s Royal Foundation made two grants totalling nearly £290,000 (AU$521,000) to Harry and Meghan’s non-profit organisation Sussex Royal last year.
Later, £145,000 (AU$260,000) of this was paid to Travalyst, a private company in which Harry owns 75 per cent of the shares.
When Sussex Royal had to close due to Harry and Meghan giving up royal duties, all its funds were transferred to Travalyst.
Graham Smith, of the anti-monarchist group Republic, demanded the official probe and said at the time: “The main objective of the grants appears to be supporting a patron’s brother.
“The Royal Foundation has lost almost £300,000 (AU$539,000) to Prince Harry’s pet projects.
“Harry’s own charity is now closing and he appears to be taking the charity’s money with him. I can’t see how that isn’t a breach of charity law.”
Prince Harry hit back at the “deeply offensive” allegations and strongly denied the claims.
And the Royal Foundation said: “The grants were to support the charitable work of The Duke and Duchess of Sussex.
“They were fully in line with governance requirements and were reported transparently.”
It is not known if the Royal Foundation is also being reviewed by the Commission.
Lawyers for the Sussexes said: “Sussex Royal was managed by a board of trustees which made decisions about the charity in accordance with its constitutional document and the requirements of charity law.
“Therefore, any suggestion of mismanagement or decision making being handled in a ‘rash’ fashion solely by the Duke and Duchess of Sussex would be entirely false.”
The ongoing review follows allegations this week that Meghan, 39, bullied staff while at Kensington Palace.
A source told The Times she drove two personal assistants out of the household and undermined the confidence of a third.
Staff were reportedly bullied and some were even reduced to tears due to difficult demands, but Meghan strongly denies the allegations.
And these bombshell claims come just days before Meghan and Harry, 36, give their “tell-all” interview with Oprah Winfrey on US telly.
Oprah’s sit-down chat with the couple is scheduled to air on CBS on March 7 from 8pm, and in Australia the following Monday at 8.30pm on Network 10.
This story first appeared on The Sun and has been republished with permission