Bilal Ahmed Quta, who operated in Karnataka, has also been fined Rs 50,000 by the court, they said. A special court of Judge Shivshankar Amarannavar pronounced the verdict on Thursday.
The case dates back to January 2007 when the man was arrested with an AK series assault rifle, 200 bullets, five hand grenades and a satellite phone by the Karnataka Police while he was getting down from a bus in Bengaluru.
He was charged with "waging war" against India, possession of arms and explosives and other sections of the Indian Penal Code. Quta was involved in these activities since 2001 and was a member of the LeT, they said.
The Enforcement Directorate later booked Quta under the criminal provisions of the Prevention of Money Laundering Act (PMLA) in 2009, taking cognisance of the police charges and subsequent conviction by a local court.
The central probe agency had also "confiscated" Rs 34,830 under anti-money laundering laws as it identified the money to be meant for terror financing. This is the fourth case of conviction under the PMLA in the country.
The PMLA was enacted in 2002 and implemented from 2005 to check serious crimes of tax evasion, generation of black money and money laundering.
The first conviction under the PMLA in the country had come in January last year when a Ranchi court convicted former Jharkhand minister Hari Narayan Rai and sentenced him to seven years imprisonment and imposed a fine of Rs 5 lakh.
Subsequently, in March last year, a man identified as Alauddin was convicted in a money laundering case relating to illegal possession of narcotic drugs by a Kolkata court.
This was followed by the conviction of Pakistani terrorist Mohammed Fahad Hai, belonging to the terror group Al-Badr, who was sentenced to seven years imprisonment by a Bengaluru court under the anti-money laundering law.
The stringent PMLA law allows for a maximum of seven years of imprisonment and a fine.