Giovanni di Stefano, 55, was held in a mansion in Palma, on the island of Majorca, on Monday evening.
He is wanted by detectives at City of London police in connection with a lengthy fraud inquiry.
A City of London Police spokesman said: '[The arrest] was the result of a European Arrest Warrant issued at City of Westminster Magistrates' Court on 31 January on matters relating to fraud, theft and money laundering."
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