The Democratic People's Front, led by Mano Ganesan, has suspended the membership of Western Provincial Council member S. Kugawarthan with immediate effect.
He has also been removed from all positions held in the party.
The Police arrested Kugawarthan yesterday for a financial fraud amounting to Rs. 70 million.
Kugawarthan is also a Vice Chairman of the DPF, a constituent party of the United National Front (UNF).
Party sources said the DPF decision-making bodies would meet next week to further discuss the party's future course of action on Kugawarthan.