Bulger, 73, a former underworld informant for the FBI accused in 19 slayings while leading the Winter Hill Gang in South Boston, has been on the run since 1995 when he fled before being arrested on federal racketeering indictments.
He was seen near Piccadilly Circus in London in September by a British businessman who first met Bulger in a hotel health club in 1994, the Boston Globe reported Friday.
The sighting has touched off an intensive manhunt throughout Britain and elsewhere in Europe, the FBI in Boston says.
The London sighting was "the most reliable sighting we've had in three years," said William Chase, the special agent in charge of the Boston FBI office.
"Our purpose now is to get as much publicity as we can, since we have an area of the world that we think is in play."
There is a $1 million reward for information leading to Bulger's capture.
The London businessman, whose name was not disclosed, told the Globe he befriended Bulger inside the gym at the Le Meridien Piccadilly hotel in 1994, a year before the gang boss became a wanted fugitive.
Then, on Sept. 10, when he encountered him again on the street in the same neighborhood, he touched him on the arm, called his name and said, "Hi mate, how are you doing?"
The businessman said Bulger appeared startled and although he appeared to recognize him, said, "No, no you've got the wrong guy" and quickly walked away.
Bulger was described as well-tanned with pure white hair and a gray goatee.
The businessman said that at the time of the latest encounter, he was unaware that Bulger was a fugitive. It was only a week later that he learned that fact while watching the film "Hannibal," a movie during which Bulger's name and photograph flashed on the screen on the FBI's 10 Most Wanted Web site as agents hunted for a fictional fugitive serial killer, Hannibal Lecter.
The businessman said he checked the FBI's Web site, confirmed Bulger was a fugitive and contacted the FBI in Boston.
The Globe said that since October, the FBI and international law enforcement officials have discovered two safe deposit boxes belonging to Bulger.
One in a London bank contained some $50,000 in U.S. and foreign currency, and the other in a Dublin bank that contained a combined $10,000 in currency. Bulger's Irish passport was also seized from one of the boxes, both of which were last accessed by Bulger in October 1994.
Authorities have said they believe Bulger stashed funds throughout Europe in the years before he went on the run.
After Bulger was indicted in January 1995, it was disclosed during subsequent court proceedings that he had been a long-time informant for the FBI, and allegedly had been involved in as many as 19 slayings.
He was able to flee just before Christmas 1994 after being tipped off by his former FBI handler -- the now-imprisoned retired FBI agent John J. Connolly Jr. -- of the impending indictment.
Also indicted was Bulger's long-time gangland partner, Stephen "The Rifleman" Flemmi, who was apprehended.
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