Kabuga was also close to former president Juvenal Habyarimana, whose death sparked the 100-day genocide after his plane was shot down over Kigali, the capital of Rwanda.
Felicien Kabuga, one of the main suspects in the Rwanda genocide, has been arrested by French police outside Paris, after being hunted by judicial authorities for 25 years.
Kabuga was indicted by the United Nations International Criminal Tribunal for Rwanda in 1997 on seven counts of genocide, complicity in genocide, direct and public incitement to commit genocide, attempt to commit genocide, conspiracy to commit genocide, persecution, and extermination, all in relation to crimes committed during the 1994 genocide against the Tutsi in Rwanda.
In 2003, U.S. investigators camped in Kenya after word went round that the Rwandan fugitive was hiding in the country but they did not manage to nab him.
The Hutu businessman is accused of funding the militias that massacred 800,000 Tutsis and moderate Hutus in 1994.
The United States had offered a reward of $5m (£4.1m) for information leading to Mr Kabuga's arrest.
General view of the apartment building where Rwanda genocide suspect Felicien Kabuga who has been known as the financier of the genocide, was arrested on May 16, 2020, in Asnieres-sur-Seine, northwestern suburbs of Paris.
The arrest paves the way for bringing the fugitive in front of the Paris appeal court and later to the International Court of Justice in The Hague, it said.
"He was arrested following a joint investigation with the IRMCT Office of the Prosecutor", Mechanism Chief Prosecutor Serge Brammertz said in reaction to the arrest.
The US has said Mr Kabuga was co-founder and chairman of the Fonds de Défense Nationale (FDN), through which he is alleged to have provided funds to the interim Rwandan government for the purposes of executing the 1994 genocide.
His eventual transfer to United Nations custody was likely to take some time because of the COVID-19 pandemic, tribunal sources said.