Choje Akong Rinpoche, 73, a co-founder of Kagyu Samye Ling centre in Eskdalemuir, Dumfries and Galloway, was attacked and killed at his residence in the city of Chengdu in southwest China last week.
Yeshe Losal Rinpoche, abbot of the Kagyu Samye Ling monastery, said suspect Tu Dan Gu Sha, also known as Thubten Kunsel, had lived in the UK for five years and returned to China two years ago, leaving on good terms.
He said his brother Akong had been kind to Thubten Kunsel and the organisation had paid his living expenses.
Yeshe Rinpoche denied claims Thubten Kunsal was owed money by the religious group and spoke of his shock that those arrested were trying to steal charitable funds.
"Whilst residing in the UK he made religious statues at our monastery in Scotland and our London centre," he said.
"He left very happy and there was no question of any economic dispute. My brother had always been very kind to Thubten Kunsal and welcomed him into the heart of our community.
"We strongly refute any claims that Thubten Kunsal was owed money by Akong Rinpoche, the monastery or our London centre. When he was with us in the UK we supported his living expenses as agreed in writing, and there was never any dispute about that.
"We are therefore very shocked that two years later he came demanding money, knowing that Akong Rinpoche was about to send funds to the Rokpa charitable projects in the Tibetan areas of China. As we have already stated, Akong Rinpoche died defending those funds."
Swiss actress Lea Wyler, co-founder and vice president of Rokpa, has already said the death of Akong Rinpoche left behind an "irreplaceable gap" but staff were determined to carry on the projects in his memory.
After the murders, police in Chengdu suggested the stabbings may have been caused by a financial dispute with other Tibetans.
The Dalai Lama and the Karmapa, head of one of the four branches of Tibetan Buddhism, were informed and were understood to be saying prayers for Rinpoche.
The monk's philanthropic work in China won him respect and admiration among Tibetans, who referred to him using the honorary title of Rinpoche.
Born in 1939, Tarap Shetrup Akong was groomed to become an abbot in a Tibetan monastery, but fled to India after the 1959 Communist takeover of Tibet.
He moved to England in 1963 and co-founded the Kagyu Samye Ling centre in 1967 in a former nurses' home.
It was the first Tibetan Buddhist monastery in the West, and is home to a community of about 60 monks and lay-people.
His death was met with shock and sadness.
"He was kind and astute, and earned the respect of the community," said Tibetan writer and activist Tsering Woeser, who met the monk in 2003 in a western Chinese town where he was preparing for a charity project.
Rinpoche, a British citizen, was attacked by three Tibetans and killed along with his nephew and a driver, Chengdu police said.