US department of justice investigators and FBI agents are reportedly looking into whether specific payments to the former national security adviser originated from Turkey.
Members of Special Counsel Robert Mueller's investigation team are probing payments received from Ankara by Michael Flynn's consultancy business, the Flynn Intel Group.
According to the New York Times, Flynn's business received $530,000 to run a campaign against Fethulleh Gulen, the man the Turkish government claims was behind the July 2016 coup.
Investigators are reportedly looking into the providence of those funds with rumours circling that they came from Ankara.
An MP told UK parliament in February that Westminster held no evidence that Gulen was behind the coup - despite intelligence sharing with Ankara.
Of particular interest to investigators is whether Flynn colluded with Ekim Alptekin, chairperson of the Turkey-US Business Council, to hide the origin of these payments.
Flynn's campaign to discredit Gulen reportedly began on 9 August after Flynn's firm signed a deal worth $600,000 with Inovo BV, a Dutch company owned by Alptekin.
Taking funds from a foreign government is not illegal, but failing to register it is - and any attempts to cover it up could lead to fraud charges.
Flynn declined to comment to the NYT on the issue.
He allegedly blocked a military plan against Islamic State group in Raqqa - due to opposition from Turkey.
Flynn told the then national security adviser, Susan Rice, to hold off on the operation, an order which delayed military action for months.
The federal investigation into whether Flynn was working as a secret lobbyist for the Turkish government began before Trump took the office - a fact the president was aware of before he assigned Flynn to his role.
Flynn was fired by US President Donald Trump 24 days into his role as his security advisor.
Some believe Trump could be drawn into the investigation. He subtly asked FBI Director James Comey if he could "see fit" to drop his investigation into Flynn, shortly before firing him.