Chauhan was arrested from Chandigarh under the provisions of the Prevention of Money Laundering Act (PMLA) as he was allegedly not cooperating with the investigating officer of the case, officials said.
The LIC agent was later brought to Delhi where he was produced before a special money laundering court, which remanded him in four-day ED custody.
The LIC agent is a crucial entity in this case as both the Enforcement Directorate and the CBI have earlier found that Chauhan was the one who allegedly invested the said tainted funds of the CM in life insurance policies.
The agency has also attached assets worth about Rs eight crore against the Chief Minister earlier this year.
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The agency has filed a case under criminal provisions of money laundering laws after taking cognisance of a complaint filed by the CBI in this regard in September last year.
ED had also conducted searches in this case last year in three states of Delhi, Maharashtra and West Bengal.
The agency is working to investigate the allegation that Singh and his family members allegedly amassed wealth of Rs 6.1 crore between 2009-11, disproportionate to his known sources of income, while serving as the Union minister of steel.
CBI suspects that during the 2009-11 period, Singh allegedly invested Rs 6.1 crore in life insurance policies in his and his family members' names through Chauhan claiming this money to be his agricultural income.
It alleged that Singh attempted to legitimise the same as agricultural income by filing revised Income-Tax returns in 2012.