The ED on Sunday arrested Mohammad Aslam Wani, an alleged hawala dealer, in connection with its about a decade-old money laundering case against Kashmiri separatist Shabir Shah.
A senior official in the central probe agency said Wani was arrested from Jammu and Kashmir's summer capital Srinagar by the Enforcement Directorate (ED) with the help of the state police.
The official said Wani (36) is being flown in from Srinagar and will be produced by evening before a special judge in Delhi for his further custody.
The ED had recently got a non-bailable warrant (NBW) issued against him from a Delhi court. The agency had issued multiple summonses for his appearance in the case but he never appeared.
"The warrant has been executed and Wani will now be confronted with Shah and others in order to take the probe forward", he said.
Shah, now in ED custody, was similarly arrested by the agency from Srinagar on July 26.
The ED action against the two is in pursuance of an August 2005 case, wherein the Delhi Police's Special Cell had arrested Wani, dealer, who had claimed that he passed on Rs 2.25 crore to Shah.
In 2010, a Delhi court had cleared Wani of terror funding charges but had convicted him under the Arms Act.
The ED had registered a criminal case under the Prevention of Money Laundering Act (PMLA) against Shah and Wani.
Wani was arrested allegedly with Rs 63 lakh, received through 'hawala' channels from the Middle East, and a large cache of ammunition, on August 26, 2005.
During questioning, he had told the police that Rs 50 lakh was to be delivered to Shah and Rs 10 lakh to Jaish-e- Mohammad area commander in Srinagar, Abu Baqar, and that the rest was his commission.
Wani, who hails from Srinagar, had also claimed that he delivered around Rs 2.25 crore to Shah and his kin in multiple instalments over the past year.
The ED, sources said, wants to probe the "proceeds of crime" of alleged terror financing in this case.