ENFORCEMENT DIRECTORATE

Description

Copyright infringement not intended

In News

Recently Enforcement Directorate (ED) is in news due to;
- Its involvement in some publicized investigations.
- An increasing number of cases registered by the Enforcement Directorate (ED) under the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA).

Details

Unlike other agencies, mainly the CBI, the ED under PMLA can investigate any offence under its schedule across the country, with or without the consent of state governments.
- The Central Bureau of Investigation (CBI) is unable to investigate unless requested by the state government or ordered by a court or the Central Vigilance Commission (CVC).
- The National Investigation Agency (NIA) has powers to initiate suo motu investigation across the country; the offences that it can investigate are limited to about a dozen offences.
- The list of offences under the PMLA has increased from just 6 offences in 2002 to 30 groups of offences.
The PMLA gives investigators the power to arrest and attach properties and assets of the accused, impose stringent bail conditions, and make a statement recorded before an investigating officer admissible in court as evidence, have made the ED much more powerful than the CBI.

Enforcement Directorate

In 1956, Enforcement Directorate was founded as the "Enforcement Unit" within the Department of Economic Affairs under the Ministry of Finance.
- In 1957, it was renamed as "Enforcement Directorate".
- In 1960, its administrative control was transferred to the Department of Revenue.
- Between 1973-77, it was under the Department of Personnel and Administrative Reforms.
The Enforcement Directorate investigate cases related to;
- Economic crimes.
- Violations of foreign exchange laws.
ED cannot take action suo motu. One has to complain to Police or any other agency first and then ED will investigate the matter.
Its headquarter is in Delhi and branches in Mumbai, Kolkata and Chennai.
It originally dealt with Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA).
At present Enforcement Directorate deals with 4 laws
- The Prevention of Money Laundering Act, 2002 (PMLA).
- The Foreign Exchange Management Act, 1999 (FEMA).
- The Fugitive Economic Offenders Act, 2018 (FEOA).
- Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)
Currently, the Enforcement Directorate (ED) is administered by the Internal Security Department under the Ministry of Home Affairs.

The Prevention of Money Laundering Act, 2002 (PMLA):

It was passed by the Indian parliament to prevent money laundering and to provide for the confiscation of property derived from money laundering.
The Act prescribes that any person found guilty of money laundering shall be jailed from 3 years to 7 years; the maximum punishment may extend to 10 years instead of 7 years.
The Director or officer above the rank of Deputy Director with the authority of the Director can attach property believed to be "proceeds of crime" for 180 days.
The Adjudicating Authority is the authority appointed by the central government to exercise jurisdiction, powers and authority conferred under PMLA.
A person, who is accused of having committed the offence of money laundering, has to prove that alleged proceeds of crime are lawful property.
An Appellate Tribunal is the body appointed by Union Government. It has the power to hear appeals against the orders of the Adjudicating Authority and any other authority under the Act.

The Foreign Exchange Management Act (FEMA)

The Foreign Exchange Management Act, 1999 (FEMA) was enacted by the Indian parliament to consolidate and amend the law relating to foreign exchange.
The objective was:
- To facilitate external trade and payments.
- Development and maintenance of the foreign exchange market in India.
It replaced the Foreign Exchange Regulation Act (FERA).
- Under the Foreign Exchange Regulation Act (FERA) of 1973, everything was prohibited unless specifically permitted.
- It required imprisonment even for minor offences.
- Under FERA, a person was presumed guilty unless he proved himself innocent,
Under FEMA, the general principle is that all current account transactions are permitted unless expressly prohibited and all Capital account transactions are prohibited unless expressly permitted.
It also paved the way for the introduction of the Prevention of Money Laundering Act, 2002, which came into effect on 1 July 2005.

The Fugitive Economic Offenders Act, 2018 (FEOA)

It deals with Indian offenders who leave India to escape laws.
The law allows ED to attach properties of fugitive offenders who have escaped India.

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)

The ED is the sponsoring agency under COFEPOSA.
The law empowers ED to sponsor cases of preventive detention with regard to the contraventions of FEMA.

Special Powers of Enforcement Directorate (ED)

Under the Prevention of Money Laundering Act, 2002 (PMLA), a statement recorded before an investigation officer (IO) is admissible in court as evidence.
- Statements to police are not admissible in court. Only statements recorded before a magistrate are admissible.
All offences under PMLA are non-bailable.
The ED does not have its own lock-ups, so People in ED custody go to the lock-up of the nearest police station, irrespective of their status.
It's very hard to recover property attached by ED.
The burden of proof is on the accused.

Concern

Many Politicians, activists, and also the Supreme Court have raised concerns about the possible political misuse of investigating agencies including the Enforcement Directorate.
The conviction rate of the Enforcement Directorate is very low, despite thousands of cases registered.

Way Forward

There must be a consensus between the authority and ED to maintain accountability and transparency during the investigation.
The investigating process itself should not become a punishment.
There must be periodic scrutiny over the working of the Enforcement Directorate by any independent agency or judiciary.