Musa is at the heart of a major probe by Swiss prosecutors investigating claims that Swiss banking giant UBS helped him to launder money, news agency AP reported on Aug 31.
British tabloid Daily Mail reported today that the Swiss probe led to a demonstration being held outside St James Palace last week, during which the royal couple was urged to give Musa (right) the snub.
Musa is believed to be instrumental in arranging the couple's visit to Sabah and will almost certainly be hosting them when they arrive on Friday.
However, St James Palace told the daily that the visit by William and Kate would proceed as planned, but it could not confirm if the couple would be meeting Musa.
"Their primary reason for wishing to visit Sabah owes itself to the Duke's interest in conservation," said a palace spokesperson.
The British Foreign Office told the daily that the government would not pass judgment on the money laundering allegation against Musa until it has been fully investigated.
According to theDaily Mail, William is keen to observe the work of the Royal Society's South East Asia Rainforest Research Programme in the Danum Valley.
This would have been the highlight of their official Diamond Jubilee tour on behalf of Queen Elizabeth II, to visit one of Borneo's last virgin rainforests.
The daily also quoted Sabah opposition figure Jeffrey Kitingan as urging the royal couple to reconsider their plan.
"We urge William and Catherine to avoid meeting Musa as it will give the wrong message to the world."
The couple began their nine-day tour today, in Singapore. They will be in Kuala Lumpur on Thursday before heading to Sabah on Friday.