More than ₹40 crore, allegedly earned from drug trafficking, was "injected" by now-sacked DMK functionary Jaffer Sadiq and his linked entities into sectors like film production, hospitality and real estate, the ED alleged on Saturday.

The Enforcement Directorate (ED) made these claims in an official statement issued by the federal agency following its raids in this case at Chennai, Madurai and Tiruchirapalli on April 9.

Sadiq, 36, was arrested by the Narcotics Control Bureau (NCB) last month for his alleged involvement in the smuggling of about 3,500 kg of pseudoephedrine with a street value of more than ₹2,000 crore.

He was expelled by the ruling DMK in Tamil Nadu in February after his name and purported links to the drugs network were mentioned by the NCB.

The money laundering case stems from separate NCB and Customs department complaints filed against Sadiq and his partners on charges of indulging in "cross-border illegal trade of narcotics substances".

Sadiq, purportedly the mastermind behind an international drug trafficking syndicate, stands accused of smuggling pseudoephedrine camouflaged as health-mix powder and desiccated coconut to Australia and New Zealand, the ED said.

It is alleged that he "funnelled" proceeds from drug sales into diversified ventures, including real estate, film production and logistics, serving as fronts for illicit activities, it said.

The search operation undertaken early this week targeted residences and businesses allegedly linked to entities "facilitating the laundering of cash generated by Sadiq," the agency alleged.

Evidence suggests, it said, the cash was layered through specific financiers before being injected into various sectors like movie production, the hospitality industry and acquiring immovable properties.

"More than Rs 6 crore direct cash payments and more than ₹12 crore cash was routed and layered for movie production. More than Rs 21 crore cash deposits were observed in the bank accounts of entities controlled by Jaffer Sadiq," the ED claimed.

It added that a "significant" amount of cash was deployed for acquiring immovable properties as well.

"More than ₹40 crore cash application have been found," the ED said.

The agency said its investigation is continuing as further analysis is being conducted to unearth more insights into the "intricate web of illicit financial activities." The NCB has said that Sadiq's links with Tamil and Hindi film financers, some "high-profile" people and some instances of "political funding" were under its scanner.

Tamil Nadu Law Minister and DMK leader S Regupathy had asserted last month that his party had no links with Sadiq.

Sadiq, as per NCB's claim, invested his alleged drug trade-earned money into his "front or cover businesses" of movie production, real estate and hospitality among others.

A Tamil film named 'Mangai' was allegedly "entirely funded" by the accused from the drug money. He also constructed a hotel in Chennai, a senior NCB officer had told reporters during a press conference in Delhi last month.

According to the NCB, Sadiq allegedly used to get ₹1 lakh per kg "cut" (commission) from smuggling narcotics.