Aslam Wani, a close aide of separatist leader Shabir Shah, was arrested on Sunday in Srinagar, according to media reports.
He was arrested in connection with an Enforcement Directorate (ED) investigation into alleged terror funding in Jammu and Kashmir.
Aslam will be brought to Delhi later on Sunday, ANI reported.
Shabir Shah was arrested by ED on 25 July in connection with a decade-old money laundering case involving alleged terror financing.
The agency had earlier issued summons to Shah in connection with an August 2005 case in which the Delhi Police’s special cell had arrested Wani, 35, an alleged hawala dealer.
According to the prosecution, Wani claimed he gave Shah Rs 2.25 crore.
The ED registered a criminal case under the Prevention of Money Laundering Act (PMLA) against Shah and Wani.
Wani was arrested with a large cache of ammunition and Rs 63 lakh, allegedly received through ‘hawala’ channels from West Asia on 26 August 2005, it had said.