Police have searched for Pathmanadan, who had a number of aliases, in Johannesburg, Rangoon, Singapore and Bangkok.
Police said they believed he had bank accounts in London, Frankfurt, Denmark, Athens and Australia and has more than 200 passports.
His group is suspected of running weapons bought in Thailand and neighbouring countries to the Tamil Tigers in Sri Lanka. The Tigers have been designated a "terrorist" group by most Western countries, but not Thailand.
Jehan Perera, of the National Peace Council of Sri Lanka, described his arrest as a "devastating blow" for the Tigers.
Perera told Al Jazeera that the LTTE would sorely miss Pathmanadan since money from abroad for the group was routed through him.
The LTTE has been fighting government forces since the early 1980s, seeking to carve out a separate homeland for the ethnic Tamils. About 70,000 people have been killed in the conflict to date.