The regulator found that the transfer of funds to MWX - which was formerly Sussex Royal: The Foundation - was in line with the governing document of the Royal Foundation and allowed under charity law.
It also found that the transfer of funds by MWX to not-for-profit sustainable travel organisation Travalyst was lawful.
It comes after Republic, which campaigns for an elected head of state, reported the foundations of the Sussexes and the Duke and Duchess of Cambridge to the regulator in July last year.
The claims were made after the Sussex Royal charitable body received a £145,000 start-up grant from William and Kate's Royal Foundation.
A further sum of £151,855 was transferred from the Royal Foundation to MWX to deliver Harry's Travalyst sustainable travel programme, and was later transferred by MWX to the Travalyst organisation.
But the Commission found that all transfers of funds were lawful.
A spokesperson for The Duke and Duchess of Sussex said: “We are pleased that the Charity Commission has confirmed what we knew from the start: that MWX Foundation, formerly Sussex Royal, complied fully with UK charity law in its handling and transferring of funds and grants.
“Today’s update provides complete closure to this review and ultimately underscores both the legitimacy of the former charity and the baselessness of the claims against it.”
Helen Earner, Director of Regulatory Services at the Charity Commission, said: “The public expects charities to make a real positive difference for the people they help or the cause they pursue. Where concerns are raised with us, whatever the charity, it’s right that we examine them and consider the issues carefully.
“In this case we have found that the trustees complied with their duties under charity law, and the transfers of funds between different organisations were in keeping with the charities’ governing documents, with conflicts of interest being appropriately managed.”
However, she added that the MWX Foundation should have done more to document its decisions, especially regarding the charity’s expenditure on legal and administrative costs.
It noted that the trustees took a decision to close the charity just 12 months after it was established “doing so during difficult and unexpected circumstances”, and that almost half its funds were spent on legal and administrative costs.
The Commission also offered the charity general guidance regarding the dissolution process.
The Duke and Duchess of Sussex decided to dissolve their Sussex Royal Foundation after renaming it MWX Trading last year.
Documents filed with Companies House showed that Harry and Meghan appointed a voluntary liquidator to start the process of shutting down the company.
The company first launched in July 2019 after the Sussexes split with the foundation they previously shared with the Duke and Duchess of Cambridge.