The Maharashtra anti-terrorism squad arrested an associate of fugitive gangster Dawood Ibrahim in an alleged terror funding case, an official said on Thursday.
The First Information Report registered by the ATS also named Anees Ibrahim, Dawood's younger brother, and another fugitive.
Parvez Zuber Vaid Memon (47) was arrested on Wednesday by officials of the ATS's Kalachowki unit from his house in suburban Versova, the official said.
Memon was involved in "anti-national activities" along with Anees, he added.
On Tuesday, an FIR was registered against "Anees Ibrahim and others" under Section 121 (A) of the Indian Penal Code (waging war against the government of India) and sections 17,18 of the Unlawful Activities (Prevention) Act for providing financial support to banned organizations involved in unlawful activities against India.
Memon's involvement in the case came to light during investigation, the ATS official said.
He allegedly disclosed during interrogation that he was involved in trafficking of drugs such as MDMA, ketamine and 'Parvati tears' (LSD).
The money earned from the drug trafficking and other illicit businesses was diverted to banned organisations for terrorist activities, the ATS official said.
Memon, who was wanted in extortion and other serious crimes too, stayed in Dubai for some time to evade Indian law enforcement agencies, he added.