John Darwin, a former teacher and prison officer, was declared dead in 2003 a year after his canoe was found wrecked in the north of England.
However, the 57-year-old walked into a London police station at the weekend, claiming that he was unable to remember where he had been.
His wife, Anne, who received a life insurance payment for her husband's 'death,' moved to Panama six weeks ago.
Darwin was arrested at his home in the early hours of Wednesday. The arrest is believed to be connected to a photo published in the Daily Mirror tabloid showing a suntanned Darwin and his wife in Panama in what is thought to be July 2006.
Anne Darwin had claimed she had not seen her husband since his disappearance.
The manager of the real estate agency in Panama where the photo was taken told the newspaper that, "I remember posing with them for that picture, they were quite happy to be pictured and knew it was going on the website.
"It's breathtaking to think they were happy to have their picture on the site when they knew they might get caught."
Speaking before the photo news broke, Anne Darwin said that the money she had received from her husband's life insurance policy, "May now have to be repaid."
"If that happens," she went on, "it won't be easy, but I'll deal with it. It's one of the things I'm struggling to come to terms with. But it wasn't the money I ever wanted. It was having my husband back."
She also added that she didn't want to live in England anymore, saying that she didn't "like the cold."
The former 'widow' also declined to reveal if she had already spent the life insurance money. She also said that she was currently unable to return to England due to visa difficulties. Police have also expressed a desire to speak to her.
Panama is one of the oldest offshore financial centers in the world.
