He was arrested while out shopping in Lopburi, a city north of Bangkok, after photos of him sitting around a checkers table were posted on Facebook in August past year by a Thai man who was impressed by the man's distinctive full body tattoos.
He's implicated, along with seven others, in the killing of Kashihiko Otobe, who was the deputy leader of the rival Kamiya gang.
The crime boss' elaborate Yakuza tattoos were spotted by a local Thai person, who was unaware of his identity.
Thai police say he admitted to being a member of a Yakuza gang, but he did not confess to the 2003 murder that he was wanted for.
The 74-year-old fugitive was apprehended while shopping in Thailand's central market town of Lopburi on Wednesday.
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The man, identified as Shigeharu Shirai, is a high-ranking member of the Japanese mafia known as the Yakuza, and in addition to tattoos on his back and upper arms, the tip of his little finger gave away his status as a Japanese mobster.
"The suspect has not confessed to murder but has admitted that the victim used to bully him", he added.
Yamaguchi-gumi is an affiliate of Japan's largest yakuza gang.
The gangs have been part of Japanese society for centuries now, and have an estimated 60,000 members.
The gangs themselves are not illegal and even have dedicated offices and business cards.
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However, Yakuza are known for making much of their earnings illicitly through the likes of gambling, prostitution, drug trafficking and cyber-hacking.
Japanese authorities have called for his arrest over an alleged role in the shooting of a rival in Japan in 2003, after which he fled to Thailand, married a Thai woman and drifted into a seemingly peaceful retirement.
Traditionally they have been tolerated as a necessary evil to keep order on the streets, although the authorities are now trying to reign in their criminal behaviour, banning banks from allowing gangsters to set up accounts.
According to Thai officials, Shirai is expected to be extradited to Japan.
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