Hussain gave the money to the family of British engineer Saad Al-Hilli, 50, from Surrey, who was murdered with his wife in the Alps, Daily Mail reported.
The Iraqi leader is said to have deposited the sum in a Swiss bank account in the name of Al-Hilli?s father.
The claim, apparently originating with German intelligence, adds a sensational twist to the baffling massacre in which Al-Hilli was killed along with his wife Iqbal, 47, his mother-in-law and a French cyclist.
They were killed in an attack which left Al-Hilli's seven-year-old daughter badly injured and her four-year-old sister traumatised.
Al-Hilli?s father Kadhim was once close to Saddam's Ba?ath Party, fell foul of the ex-Iraqi president in the 1970s, and fled Iraq for Britain.
The site of the Sep 5 massacre, an isolated lay-by near Lake Annecy in eastern France, is only an hour?s drive from Geneva where the money was deposited.
Swiss prosecutor Dario Zanni believes the family may have been returning from there when it was ambushed.
It has also raised the possibility that Al-Hilli had managed to gain access to the account, thought to have remained in his father?s name and this fact was known to his killer.
The story was reported in French newspaper Le Monde.