Intelligence officials in Russia, Britain and the US all confirm on Tuesday that it was a multinational sting operation involving numerous agents from all three countries.
The unnamed dealer was finally arrested at Newark in New Jersey after he was followed closely for over three days.
Two more people were later arrested in New York and the three suspects are expected in court on Wednesday.
Officials say the British man successfully imported a Russian-made Igla missile into the US and believed he was selling it to a Middle-Eastern extremist.
But his buyer was an undercover FBI agent and the missile seller’s voice is clearly heard on tape saying he wanted the missile to be used to shoot down a large passenger plane.
The Igla missile, that has a range of 4 km and uses infrared technology, was brought into the US at Baltimore docks, shipped from Russia and disguised as medical equipment.
Tom Mangold, a BBC journalist, said the dealer obtained one missile for $85,000, purchased from corrupt middle management at a Russian factory.
The arms dealer was also promised access to another 50 missiles.
Mangold said the dealer’s apartments in London were being searched by Scotland Yard and more arrests are likely to follow.
Washington officials are remaining tight-lipped about the operation but admitted there had been at least one arrest so far, with more expected.
MI5 and MI6 in London were involved with Russian secret services FSB and the FBI in an operation that demonstrated close cooperation.