According to Sky Italia, Benzema's representatives held talks in Milan on Monday, but his agent has laughed off the rumours on Twitter.
Benzema agreed to join the club, who yesterday were cleared to play in the Europa League next season after having a ban for breaching financial fair play rules overturned on Friday.
AC Milan have promised to match his 9million annual salary at Real Madrid, and have offered him a contact until 2020.
Everything now depends on Florentino Perez.