Police in Mauritius on Sunday arrested the island's former prime minister Pravind Jugnauth in a money-laundering probe and seized stacks of cash in raids on fellow suspects' homes, officials said.

Officers detained the 63-year-old along with his wife Kobita Jugnauth on Saturday and questioned them for several hours, police sources who asked not to be named told AFP.

Kobita Jugnauth was later released and Pravind Jugnauth was placed under formal arrest in the early hours of Sunday.

Pravind Jugnauth's lawyer Raouf Gulbul told reporters: "He gave his version of events and denied the allegations made against him."

He said the ex-premier would appear before a judge later on Sunday.

A police incident report seen by AFP detailed a search by officers at the home of another suspect, who works for a local leisure company.

It said they seized documents bearing the names of the Jugnauths, as well as luxury watches and stacks of various currencies.