A coffee shop in Sydney, Australia was being held up Monday, with hostages forced to display an Islamic flag bearing the shehada (the Muslim affirmation of faith) at the window.

The shehada is frequently found on flags belonging to jihadist groups. The Islamic creed reads “There is no god but Allah, Muhammad is his messenger.”

According to the CEO of the cafe, there were believed to be between 40 to 50 people inside the shop, including 10 staff members. Early reports said there were at least 12 people inside, a significantly lower number.

The hostages were being made to stand with their hands up against the windows of the shop for the past several hours. Earlier, reports mistakenly said the flag displayed at the coffee shop window belonged to the Islamic State group.

An armed man bearing a black headband could be seen though the windows of the cafe. Australian TV showed the man holding a young woman as a human shield as he walked by the windows.

It is unclear how many armed persons were inside the cafe, but initial reports said not more than one. There were conflicting reports about the weapons used by the man, with some saying a pistol and others saying a sawed off handgun. There were unconfirmed reports that the man also had explosives.

Australian police said they were dealing with an “armed incident” and were attempting to make contact with those inside the cafe.

The police urged the media “to be responsible in their reporting” and avoid “unnecessary alarm.”

The cafe is located inside Martin Place, a pedestrian mall in the city’s busy business and banking district. In September, Australian police said they uncovered an Islamic State-linked terrorist plot to randomly kidnap and behead Australians in the area on Martin Place.

The incident began at 9:45 am local time Monday when a call came through to emergency services that a hold-up at the Lindt Chocolat Cafe in the city was under way.

Australia’s 9news reported that the perpetrator said he has “devices” around the city and demanded to speak with Australian Prime Minister Tony Abbott.

A statement by Abbott read on Australian news confirmed that state and federal police were involved in the hostage-taking situation.

“This is obviously a deeply concerning incident but all Australians should be reassured that our law enforcement and security agencies are well trained and equipped and are responding in a thorough and professional manner,” the statement read.

The PM is set to speak to the media later Monday.

Security has been tightened around Jewish community buildings in the city.

Police and security forces were at the scene and the area around the cafe was closed off to traffic and pedestrians. Earlier reports claimed the airspace over the city was shut down, but a statement from the airport said it was not the case and the airport was fully operational.

This is a developing story.

In September, Australian police uncovered a major terrorist plot in which Islamic State lone-wolf attackers were ordered to abduct and behead Australian civilians as retribution for Australia’s membership in the international coalition against the extremist jihadist group.

Australia has estimated about 60 of its citizens are fighting for the Islamic State group and the Nusra Front in Iraq and Syria. Another 15 Australian fighters had been killed, including two young suicide bombers.

The government has said it believes about 100 Australians are actively supporting extremist groups from within Australia, recruiting fighters and grooming suicide bomber candidates as well as providing funds and equipment.