The Enforcement Directorate (ED) on Sunday arrested Aslam Wani, a close aide of separatist leader Shabir Shah in connection with the terror funding and money laundering charges.
The authorities arrested Wani from his residence in Srinagar and will be brought to New Delhi for further investigation.
The development comes days after a court in Delhi sent Shabir Shah for seven days custody, to be quizzed by ED in his alleged involvement in money laundering case.
The police arrested Shabir after hawala dealer Muhammad Aslam Wani, accepted to siphon money to the tune of Rs 2.25 crore to the separatist leader.
Earlier last month, in a major crackdown, the National Investigation Agency (NIA) arrested seven separatist leaders from Srinagar for their involvement in terror funding case from across the border in Pakistan.
Also in June, NIA seized over Rs 1 crore during nearly two dozen raids conducted in various Separatists locations in Srinagar, Delhi, and Haryana.
NIA had initiated a preliminary inquiry (PE) against Hurriyat Chairman Syed Ali Shah Geelani and his close aide and Hurriyat provincial President Nayeem Khan after he in a TV sting operation confessed that Hurriyat leaders have been receiving funds from Pakistan for subversive activities in the Kashmir Valley.
The development comes as a part of an ongoing investigation on the suspicion of involvement of the separatist leaders in channelling the money from across the border for fuelling terror related activities in the Valley.