DIRECTORATE OF
ENFORCEMENT
-G.Rajput
Have you watched ??
G.Rajput Sir’S
GOVERNANCE
COURSE
-G.Rajput
Covered 18 Lessons
Language: bilingual
Must Watch
Internal Security
COURSE
By -G.Rajput
Covered 15 Lessons
Bilingual
ETHICS BATCH
BY-G.Rajput
Covered 25 Lessons
Bilingual
Most Watched course on
Indian
POLITY
Covered 52 Lessons
Bilingual
BY-G.Rajput
-G.Rajput
What is the
DIRECTORATE OF ENFORCEMENT (ED)?
The Directorate of Enforcement (ED) is a multi-disciplinary
organization mandated with investigation of offences of money
laundering and violations of foreign exchange laws.
It functions under the Department of Revenue of the Ministry of
Finance.
As a premier financial investigation agency of the Government of
India, the Enforcement Directorate functions in strict compliance
with the Constitution and Laws of India.
-G.Rajput
WHAT IS THE
STRUCTURE OF ED?
Hierarchy: The Directorate of Enforcement, with its headquarters at New Delhi, is headed by
the Director of Enforcement.
There are five regional offices at Mumbai, Chennai, Chandigarh, Kolkata and Delhi
headed by Special Directors of Enforcement.
Recruitment: Recruitment of the officers is done directly and by drawing officers from other
investigation agencies.
It comprises officers of IRS (Indian Revenue Services), IPS (Indian Police Services) and
IAS (Indian Administrative Services) such as Income Tax officer, Excise officer, Customs
officer, and police.
-G.Rajput
Tenure: In November 2021, the President of India promulgated two
ordinances allowing the Centre to extend the tenures of the
directors of the Central Bureau of Investigation (CBI) and the
Enforcement Directorate from two years to up to five years.
-G.Rajput
WHAT ARE THE STATUTORY
FUNCTIONS OF ED?
The statutory functions of the Directorate include enforcement
of following Acts:
COFEPOSA
Foreign Exchange Management Act, 1999 (FEMA)
Prevention of Money Laundering Act, 2002 (PMLA)
Fugitive Economic Offenders Act, 2018 (FEOA)
-G.Rajput
-G.Rajput
HOW ED FUNCTIONS
UNDER PMLA?
Powers of ED :
The ED carries out search (property) and seizure (money/documents) after it has
decided that the money has been laundered, under Section 16 (power of survey)
and Section 17 (search and seizure) of the PMLA.
On the basis of that, the authorities decide if arrest is needed as per Section 19
(power of arrest).
Under Section 50 of the PMLA, the ED can also directly carry out search and
seizure without calling the person for questioning.
It is not necessary to summon the person first and then start with the search
and seizure.
-G.Rajput
If the person is arrested, the ED gets 60
days to file the prosecution complaint
(chargesheet) as the punishment under
PMLA doesn't go beyond seven years.
If no one is arrested and only the
property is attached, then the
prosecution complaint along with
attachment order is to be
submitted before the adjudicating
authority within 60 days.
-G.Rajput
Expansion of Power of ED under PMLA :
The PMLA schedule has expanded from six to 30 offences since 2002.
The ED can now investigate a range of crimes, from terrorism to wildlife
hunting and copyright infringement.
Amendments in 2009 added 'criminal conspiracy', granting the ED
authority to probe conspiracy cases.
In 2015 and 2018, the ED gained power to seize Indian properties linked to
laundered money acquired abroad.
2019 amendments extended the ED's authority to attach properties earned
through criminal activity.
-G.Rajput
In April 2023, the Ministry of Finance expanded the scope of PMLA by
adding the activities related to Virtual Digital Assets (VDA) and Crypto
currency under the Act.
By this move, VDA entities could end up dealing directly with
enforcement agencies, like ED (Enforcement Director).
In July 2023, Goods and Services Tax Network (GSTN) was included in
the PMLA, allowing information sharing between GSTN, ED, and other
agencies, modifying Section 66 provisions.
-G.Rajput
Comparison of Powers of ED and CBI/NIA :
The PMLA allows the ED to take cognizance of any offence under its wide-
ranging schedule across the country, with or without the consent of state
governments.
It has, therefore, been able to register money laundering cases against
politicians or activists based on FIRs filed by state police forces — something
the CBI is unable to do unless requested by the state government, or ordered by
a court or the Central Vigilance Commission (CVC).
While the National Investigation Agency (NIA) too has powers to take suo
motu cognizance of offences across the country, the schedule of the NIA Act —
that is, the types of offences that it can investigate — is limited to about a
dozen offences.
-G.Rajput
Contentious Provision :
The PMLA’s provisions on admissibility of statements made by the accused as
evidence, and the stringent bail provisions have been the most contentious.
It is the only Act in the country in which a statement recorded before an
investigating officer is admissible in court as evidence. Other laws that
contained such provisions, such as TADA and POTA, have long been repealed.
The provision for bail stipulates that a magistrate will not grant bail to an
accused unless he is convinced that prima facie no case is made out. This
provision was struck down by the Supreme Court on the ground that it
presupposed the trial at the stage of bail itself.
-G.Rajput
WHAT ABOUT ED’S
JURISDICTION?
Both FEMA or PMLA apply to the whole of India. So, the ED can
take action against any person on which this act applies.
Cases under FEMA may lie in civil courts where PMLA cases
will lie in criminal courts.
The agency has jurisdiction over a person or any other legal entity
who commits a crime.
All the public servants come under the jurisdiction of the
agency if they are involved in any offence related to money
laundering.
-G.Rajput
ED can not take an action suo motu. One has to complain to any
other agency or Police first and then ED will investigate the matter
and will identify the accused.
The ED will investigate the matter and may attach the property
of an accused person and also make an arrest and start
proceeding with the violation of the provisions of FEMA and
PMLA act.
The matter will be resolved by way of adjudication by courts or
PMLA courts.
-G.Rajput
WHY IS THE ED BEING
CRITICISED LATELY?
The Supreme Court (SC) is examining allegations of rampant misuse of PMLA by
the government and the Enforcement Directorate (ED). Major Allegations
include:
Being Used for Ordinary Crimes:
PMLA is pulled into the investigation of even “ordinary” crimes and
assets of genuine victims have been attached.
PMLA was a comprehensive penal statute to counter the threat of
money laundering, specifically stemming from trade in narcotics.
Currently, the offences in the schedule of the Act are extremely
overbroad, and in several cases, have absolutely no relation to
either narcotics or organised crime.
-G.Rajput
-G.Rajput
Lack of Transparency and Clarity:
The Enforcement Case Information Report (ECIR) - an equivalent of
the FIR - is considered an “internal document” and not given to the
accused.
The ED treats itself as an exception to the principles and
practises [of criminal procedure law] and chooses to register
an ECIR on its own whims and fancies on its own file.
There is also a lack of clarity about ED’s selection of cases to
investigate.
The initiation of an investigation by the ED has consequences
which have the potential of curtailing the liberty of an
individual.
-G.Rajput
WHAT ARE THE RECENT CONTROVERSIES
REGARDING PMLA AND THE POWERS
AND EFFICIENCY OF ED?
The PMLA formulated in 2002 has undergone various critical changes from
time to time in order to give itself more strength to deal with the offence of
money laundering.
However, on account of these amendments, several petitions have been
filed across the country that question the almost blanket powers
assigned to the ED under PMLA for searching, seizing, investigating, and
attaching assets considered to be proceeds of crimes.
-G.Rajput
Moreover, in a recent hearing, the SC upheld the constitutional validity of the
PMLA and ED’s power to hold inquiries, arrest people and attach property
(under Section 5 of the Act).
The Court stated that Section 5 provides for a balancing arrangement to
secure the interests of the person and also ensures that the proceeds of
crime remain available to be dealt with in the manner provided by the
2002 Act.
It rejected the argument that ED authorities are police officers and,
hence, a statement recorded by them (Section 50 of the Act) would be
hit by Article 20(3) of the Indian Constitution which says no person
accused of an offence shall be compelled to be a witness against
himself (self incrimination).
-G.Rajput
Additionally, the conviction rate of the ED under PMLA is very low,
despite thousands of cases registered and people arrested.
According to the data quoted by the government in Parliament of
India, there were zero convictions between 2005 and 2013-14.
By 2014-15 to 2021-22, out of 888 cases under ED, only 23 cases
were under conviction.
-G.Rajput
WHAT REFORMS CAN BE
BROUGHT TO THE ED?
It is true that law has given stringent powers to the ED in dealing with the
accused that can increase the possibility of political misuse.
But there must be a consensus between the adjudicating authority and
the officers of ED to abide by the constitutionality of provision under
PMLA, making the investigation more lucid.
-G.Rajput
The process itself should not become a punishment. ED's expanded powers
should be welcomed with a greater commitment to expeditiously resolve the
cases, so both the judiciary and enforcement agencies can move forward
with speedy trials and convictions.
There must be a constant scrutiny over the operations of the Enforcement
Directorate and current disposition whether this clarification will improve the
conviction rate (which is right now less than half a percent).
And if there will be any lacunas in the operative part, change is the law of
nature, these gaps can be filled either through suitable legislation,
executive action or revised order of the apex court.
-G.Rajput
THANK YOU
FOR YOUR ATTENTION
Class by G.RAJPUT
-G.Rajput
