Buckingham Palace has refused to confirm reports of a blackmail bid
The target of an alleged blackmail plot against the Royal Family was not a senior figure, the BBC understands.
Buckingham Palace has refused to discuss the report in the Sunday Times, which said the case involved allegations of drugs and sex.
Two men, named as Ian Strachan, originally from Aberdeen, and Sean McGuigan, appeared before magistrates on 13 September accused of blackmail.
The BBC understands the claims relate to a royal with a low public profile.
The two men, aged 30 and 40, who both now live in London, appeared before City of Westminster magistrates and were remanded in custody. They are due to appear at the Old Bailey on 20 December.
Both claim to move on the fringes of royal circles.
A Palace spokesperson would only say it was a police matter and Scotland Yard was investigating.
The Sunday Times says two men contacted a member of the royal staff and demanded £50,000, threatening to go public with video recordings involving sex and drugs if their demand was not met.
The paper alleges that the extortion attempt was launched on 2 August when a man telephoned the Royal Family member's office and said he had evidence that they had supplied an aide with an envelope containing cocaine.
According to the Sunday Times, the caller then claimed that he had a video tape showing the aide performing oral sex on someone, whom the alleged blackmailer indicated was the Royal Family member.
During further calls, one of the men said that he had footage of an aide snorting cocaine, the paper adds.
The report alleges that a detective posing as a member of the royal's staff arranged a meeting at the Hilton hotel on London's Park Lane on 11 September, where parts of the video were shown.
But Scotland Yard detectives who had been secretly filming the meeting from an adjacent room then arrested the two suspects, it continues.
A Scotland Yard spokeswoman said the magistrates' hearing had been held "in camera", or in private, and that reporting restrictions had been imposed to prevent the victim or witnesses from being identified.
Former Palace spokesman Dickie Arbiter said royal officials would have carried out their own inquiry into the validity of the Sunday Times story, but that it was unlikely that the name of the Royal Family member would be revealed.
"It's a vast family, there are nearly 40 members... We don't know, we won't know, until the case comes to trial at the Old Bailey in December, and we might not even know then, which member of the Royal Family [it is]."
Mr Arbiter added that he was surprised by how long it had taken for the story to break.
"It's taken six weeks for it to come to light, so how serious is the allegation?
"It's interesting too, that it's come out in the Sunday Times and not one of the usual tabloid scoops.
"So it's going to take the due process of the law to determine was this true or was this just another fake sting?"