Last week, Sarah Ferguson was filmed taking a cash down payment of £27,600 ($40,000) as part of a £500,000 ($723,000) deal from an undercover News of the World journalist posing as a wealthy businessman.
And on Sunday, the mother-of-two issued a statement saying she was "sincerely sorry" for her actions and admitted that her finances had been under strain.
"I very deeply regret the situation and the embarrassment caused," she said. "It is true that my financial situation is under stress. However, that is no excuse for a serious lapse in judgement and I am very sorry that this has happened."
Sarah also added that her ex-husband, the Duke of York, "was not aware or involved in any of the discussions that occurred" – a statement since confirmed by the palace and by Andrew who "categorically" denies any knowledge of the meeting.
"The duke has made a significant contribution to his business role over the last ten years and has always acted with complete integrity," Sarah added.
In the video, the 50-year-old royal is seen telling the undercover reporter: "£500,000 when you can, to me…open doors", adding that the money would "open up all the channels whatever you need, whatever you want, and then you meet Andrew and that's fine."
As news of the story broke at the weekend, Sarah and her eldest daughter, Princess Beatrice, were in Cannes attending Naomi Campbell's 40th celebrations before the Duchess appeared at a Hollywood reception to receive an award for her charity work.
Speaking to the crowd, which included Simon Cowell, as she picked up her honour in LA, Sarah said: "Thank you all so very much, When I got on that flight today I thought, phew, I've had a heavy day.
"I learnt today about making a difference. Most importantly I learned I hate grown-ups and I love children."
Meanwhile, it has also emerged that the Duchess has offered to move out of Prince Andrew's residence, where she currently lives.
But it is thought the Duke, who last night arrived back from Singapore, is concerned about where she will go and who will pay for her accommodation.
Having reportedly spoken to his former spouse on the phone, Andrew is believed to be holding crisis talks with the Queen on Monday.
Sarah and Andrew were married in 1986 and have two children, Beatrice and Eugenie.
In 1992 they separated and divorced in 1996, although Sarah and her daughters later moved back into a wing of the former marital home with Andrew.