From LEGO Batman Wiki
"Arkham Asylum for the Criminally Insane is run by Dr. Jeremiah Arkham. Located on the outskirts of Gotham, it houses some of Batman's most dangerous foes." Lego Batman DS
Arkham Asylum for the Criminally Insane is home to many of Gotham City's supervillains. It is run by Dr. Jeremiah Arkham and is located on the edge of Gotham. Many villains such as the Scarecrow have stayed here at one point or another. It's also used as the HUB
for the villians in Lego Batman: The Video Game.In the game the Penguin and Killer Croc rescued Catwoman from the prison to get the diamond she stole.At the start of the game,all the villains break out of Arkham Asylum and join seperate gangs,each led by a famous Batman villain. The Character Customiser is also located here, except for in the DS version, where it is located in the Batcave Trophy Room.