This is a 2013 file photo of a supporter of Altaf Hussain, leader of the MQM, holds his picture during a protest rally in Karachi, Pakistan. Picture: Shakil Adil, File

London - The leader of Pakistan's MQM party, Altaf Hussain, has been arrested in London on suspicion of money laundering, reports said on Tuesday, sparking panic in his home city of Karachi.

British police said only that a 60-year-old man had been detained at a residential address in north-west London and officers were searching the building.

“Officers have this morning arrested a 60-year-old man on suspicion of money laundering,” a statement from the Metropolitan Police said.

Hussain fled Pakistan for Britain in 1992 after a military operation to end ethnic unrest in Karachi and has said his life could be in danger if he returns to Pakistan.

Chaos gripped the Pakistani port city soon after local television broadcast the reports, as people left their workplaces and rushed to stock up on groceries in an anticipation of a prolonged shutdown.

Karachi police beefed up the security at the diplomatic enclave in the upmarket area of Clifton, with a special focus on the British mission there.

“We have tightened the security of the consulates, especially of the British,” city police chief Ghulam Qadir Thebo said.

The Muttahida Qaumi Movement (MQM) has its power base in the violence-wracked city of Karachi.

The party was created to safeguard the rights of the Urdu-speaking community of the city who migrated from India to newly created Pakistan at the time of partition in 1947.

Hussain's residence in London was raided on suspicion of money laundering in 2012 and 2013 by British police. - AFP