MADRID: Two former Irish Republican Army members and convicted bombers Leonard Hardy and his wife Donna Maguire, who live outside Dundalk, were arrested in Spain last week.
Garda sources say Maguire has now been released on bail and is due back in Ireland.
Hardy remains in custody on the Canary Islands after bail was set for him at €250,000.
He was a target of the Criminal Assets Bureau and fined €10,000 in the Dublin Circuit Court last July after he pleaded guilty to tax offences.
He is also repaying a CAB tax demand after agreeing to pay the Revenue Commissioners €280,000.
Spanish police say the couple were arrested in Lanzarote on 29 December along with five others as part of coordinated raids in Las Palmas, Alicante, Malaga and Murcia.
The police allege they were part of an organisation smuggling tobacco and alcohol, which laundered money through the acquisition of an estimated €10.5m worth of property.