Bali police chief Daniel Adityajaya said Lyons was wanted in Spain as the alleged "leader of a large-scale transnational criminal organisation" engaged in drug trafficking and money laundering.
Police in Scotland and Spain carried out raids in connection with Lyons' case last week resulting in multiple arrests with the help of Europol, the European Union law enforcement cooperation hub.
Steven Lyons, head of a dominant Scottish crime group, which was embroiled in a bloody over two-decade-long feud with rival Daniel group, has been arrested by Indonesian police.