The investigators were baffled when Hussain, a Sri Lankan national, disclosed about his recruitment drive to spread the ISI network, the sources said.
Based on information provided by Hussain, suspected to have been acting as an agent of a Colombo-based ISI operative, police arrested two of his associates - Siva Balan, also a Sri Lankan, and Mohammed Salim of Chennai yesterday.
The ISI operative in Colombo targetted Sri Lankans for recruitment obviously to take advantage of the sympathy factor for the island nation's Tamils in Tamil Nadu.
Hussain has told the investigators that his modus operandi of luring people into his bait was by engaging them for circulating fake currency for handsome commissions.
According to the sources, Hussain and his two associates have confessed to running the fake currency racket.
The investigators are focussing on whether Hussain had any link with Rajasthan-based IM operative Ashraf Ali, who was arrested in a joint operation by Rajasthan and Tamil Nadu police yesterday in Cuddalore, about 200 km from here.
Meanwhile, a Cuddalore court has granted five-day transit remand of Ashraf Ali to enable Rajasthan police to take him to their state for further interrogation.
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