Sweeping Powers of Directorate of Enforcement (ED)

The Supreme Court endorsed the sweeping powers of the Directorate of Enforcement (ED), saying the Central agency could call “anybody for any information” even as it castigated Tamil Nadu District Collectors for failing to appear in person in response to a summons issued to them by the anti-money laundering body.

1: Dimension- Power and Function of ED:

• Search and Seizure- ED carries out search (property) and seizure (money/documents) under Section 16 and Section 17 of the PMLA.
• In case of Arrest-If the person is arrested, the ED gets 60 days to file the prosecution complaint (charge sheet) as the punishment under PMLA doesn't go beyond seven years.
• In property attachment- 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 authoritywithin 60 days.

2: Dimension- Power of ED for ‘interrogation’ and ‘Custody’:

• Under Prevention of Money Laundering Act, 2002 (PMLA):Following the recommendations of the Financial Action Task Force (FATF) India enacted PMLA.
• The ED has been entrusted with the responsibility of executing the provisions of PMLA by conducting investigation to trace the assets derived from proceeds of crime, to provisionally attach the property and to ensure prosecution of the offenders and confiscation of the property by the Special court.
• 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.
• 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.

3: Dimension- Effectiveness of ED

• As of March 31, 2022, the ED's conviction rate was less than 0.5 per cent, with only 23 convictions in 5,422 PMLA cases. In comparison, the national conviction rate in India for offences of the Indian Penal Code was 57 per cent in 2021.
• Petitions challenging PMLA provisions, particularly related to arrests and property attachments, have been presented in the Supreme Court.