The Japanese version of the game originally contained an enemy called Ash who was based on an offensive homosexual stereotype. This character was removed from the western versions of the game, but he appears on a poster in Streets of Rage 4.
According to the Streets of Rage Wiki, Ash is "comes across as a stereotypically flamboyantly gay man in derriere-bearing chaps who prances around the screen, giggles, and cries when he's defeated."
Here's how Ash appears in the original game:
For the Mega Drive Mini 2 – which contains the Japanese version of Bare Knuckle 3 (accessed by changing the console's language) – not only has this character been removed, but the section of level one in which he appears has also been cut.
The change was spotted by Retro Gamer's Nick Thrope, the same person who spotted the tribute to Phantasy Star co-creator Rieko Kodama, whose death in May of this year had previously not been made public knowledge.
This appears to be the first time that Sega has censored the game since its original release in the '90s. The Bare Knuckle Collection on Xbox 360 retained both the level and the character.