The functioning of the Enforcement Directorate

The Enforcement Directorate (ED) is in the news now and often.

About Enforcement Directorate (ED):

• It was established as ‘Enforcement Unit’ in 1956 under the Department of Economic Affairs, for handling Exchange Control Laws violations under the Foreign Exchange Regulation Act (FERA).
• Today, Directorate of Enforcement is a Multi-Disciplinary Organization mandated with the task of enforcing the provisions of two special fiscal laws – Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).
• Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above ?1 crore, the ED steps in.
• The ED can also carry out search (property) and seizure (money/documents) if it suspects money has been laundered.
• Since the PMLA was enacted only in 2005, any ill-gotten property acquired before the year 2005 has no case under PMLA.
• Functions:-
  • To collect, develop and disseminate intelligence relating to violations of FEMA, 1999, the intelligence inputs are received from various sources such as Central and State Intelligence agencies, complaints etc.
  • To investigate suspected violations of the provisions of the FEMA, 1999 relating to activities such as “hawala” foreign exchange racketeering, non-realization of export proceeds, non-repatriation of foreign exchange and other forms of violations under FEMA, 1999.
  • To adjudicate cases of violations of the erstwhile FERA, 1973 and FEMA, 1999.
  • To realize penalties imposed on conclusion of adjudication proceedings.
  • To handle adjudication, appeals and prosecution cases under the erstwhile FERA, 1973
  • To process and recommend cases for preventive detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA)
  • To undertake survey, search, seizure, arrest, prosecution action etc. against offender of PMLA offence.
  • To provide and seek mutual legal assistance to/from contracting states in respect of attachment/confiscation of proceeds of crime as well as in respect of transfer of accused persons under PMLA.

From where does the ED get its powers?

• As per the Prevention of Money Laundering Act, the ED got its power to investigate under Sections 48 (authorities under act) and 49 (appointment and powers of authorities and other officers).
• If money has been laundered abroad, the PMLA court (constituted as per the Act) has the right to send a letter of rogatory under Section 105 (reciprocal arrangements regarding processes) of the Code of Criminal Procedure. 

Other roles and functions of the 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 will decide if arrest is needed as per Section 19 (power of arrest).
• Under Section 50 (powers of authorities regarding summons, production of documents and to give evidence etc), 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.