Last year, the ED had registered a money laundering case against Mr Naik's Islamic Research Foundation or IRF under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) on the basis of an FIR registered by the National Investigation Agency (NIA).
"It was alleged that Dr Zakir Abdul Karim Naik and his associates were indulging in unlawful activities and through his provocative utterances, promoting enmity and hatred between different religious groups in India.
"His inflammatory speeches and lectures have inspired and incited a number of Muslim youths in India to commit unlawful activities and terrorist acts," a statement from the Directorate said.
The IRF Mumbai was declared as unlawful under the Unlawful Activities (Prevention) Act, 1967 by a government order on November 17, 2016.
Based on the investigation conducted, Gazdar was arrested by the ED under Section 19 of the PMLA on February 16 and is currently in judicial custody.
The ED said during the investigation, it was found that certain dummy companies were established by Mr Naik for routing the proceeds of crime. Out of the various companies established by Naik, Gazdar was Director in at least six of those.
The investigation also revealed that Gazdar, a confidant of Mr Naik, was in close touch with him and also involved in illegal activities at the behest of Mr Naik and was not only aware of many of his nefarious and illegal activities but actively collaborated and assisted in such activities.
The agency said unaccounted money around Rs 5.15 crore belonging to Mr Naik in cash had been handled by him on the instructions of Naik without leaving any trail on its origin or utilisation within a span of eight months only.
"No other person is privy to the source and actual use of this substantial unaccounted cash."
The ED has already attached properties in the form of Mutual Funds, real estate properties and bank balances worth Rs 17.45 crore of the IRF.
A special court on April 13 issued a non-bailable warrant for arrest against Mr Naik after he failed to appear before the ED despite four summons served on him.
The statement added that the ED may file supplementary prosecution complaints against Naik as he had so far not appeared before it.