Enforcement Directorate, its Functions and Controversies

Directorate of Enforcement (ED) is a specialised financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India which enforces two very important laws: The Foreign Exchange Management Act,1999 (FEMA) and the Prevention of Money Laundering, 2002 (PMLA)

The Foreign Exchange Management Act, 1999 (FEMA) is civil law. The ED investigates into suspected contraventions of the Foreign Exchange Laws and Regulations. Adjudicate, contraventions, and impose penalties on those adjudged to have contravened the law.

The Prevention of Money Laundering Act, 2002 (PMLA) is criminal law. The ED works to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/confiscate the same, and to arrest and prosecute the offenders found to be involved in Money Laundering.

With its headquarters in New Delhi, the ED is headed by the Director of Enforcement, Sanjay Kumar Mishra.

It is basically a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. The officers in the ED are composed from the Indian Revenue Service, Indian Corporate Law, Indian Police Service and the Indian Administrative Services as well as promoted officers from its own cadre.

The main functions and core values of ED

According to the main website of Enforcement Directorate, the main functions of the directorate include –

1.Investigate contraventions of the provisions of Foreign Exchange Management Act, 1999(FEMA) which came into force with effect from 1.6.2000. Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties upto three times the sum involved can be imposed.
2.Investigate offences of money laundering under the provisions of Prevention of Money Laundering Act, 2002(PMLA) which came into force with effect from 1.7.2005 and to take actions of attachment and confiscation of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA, and to prosecute the persons involved in the offence of money laundering. There are 156 offences under 28 statutes which are Scheduled Offences under PMLA.
3.Adjudicate Show Cause Notices issued under the repealed Foreign Exchange Regulation Act, 1973 (FERA) upto 31.5.2002 for the alleged contraventions of the Act which may result in imposition of penalties. Pursue prosecutions launched under FERA in the concerned courts.
4.Processing cases of fugitive/s from India under the Fugitive Economic Offenders Act, 2018. The objective of this Act is to provide for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian Courts and to preserve the sanctity of the rule of law in India.
5.Sponsor cases of preventive detention under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974(COFEPOSA) in regard to contraventions of FEMA.
6.Render cooperation to foreign countries in matters relating to money laundering and restitution of assets under the provisions of PMLA and to seek cooperation in such matters.

As the main financial investigation agency of the Government of India, the ED functions in strict adherence to the Constitution and Laws of India. The core values the ED is supposed to function with are, integrity, accountability, commitment, excellence and impartiality.

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Why is ED a subject to controversies in 2020?

On August 16, 2020, an advocate Ghanshyam Upadhyay filed a petition in the Bombay High Court demanding transparency in the functioning of ED. The plea urges for directions that all ED case Information Reports (ECIRs) and orders refusing the registration of ECIR are displayed on the official website of the ED.

According to the plea, when any investigating agency registers a “scheduled offence” (according to PMLA), such agency should be under an obligation to forward a copy of the FIR to the ED. This should happen to enable the ED to perform its own required commitment to investigate such a case.

According to the registered petition, If any citizen is victim of money laundering, he can very well approach the ordinary criminal court with regard to ‘scheduled offence’ but no remedy is provided to him to insist for adding the offence of Money Laundering or to seek attachment of properties of the accused person.

Pointing to the judgement in the Youth Bar Association case in 2016, the petition states that it was directed that all investigating agencies including the Central Bureau of Investigation (CBI) should display the FIR on their official website within 24 hours.

The plea states, “The conduct of ED shows a contemptuous attitude in obtaining assistance from informed or public-spirited citizens in its investigation. It is necessary to state that till date the ‘trail’ of money has not been traced by ED and the acts and actions of ED are confined only to ‘attaching’ domestic assets of Nirav Modi and his associates, most of which actually constitute security for secured loans of the Nirav Modi Group.”

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It also adds, “If ED is created for the public good, it is quite necessary that people feel proud about such prime agency and would come forward as whistleblowers, informers, witnesses etc. with hope and confidence that their contributions would ultimately add to nation’s exchequer and augment the wealth of India by confiscation of every single property that represents “proceeds of crime”.

Amnesty Internation and the Enforcement Directorate

Amnesty International India’s bank accounts were completed frozen by the ED, bringing all the work in progress to an abrupt halt. The company came to know about the freezing on September 10, 2020. The organisation allegedly was compelled to let go of its staff members and stop all its work and researches.

The Executive Director of Amnesty International India said, “The continuing crackdown on Amnesty International India over the last two years and the complete freezing of bank accounts is not accidental. The constant harassment by government agencies including the Enforcement Directorate is a result of our unequivocal calls for transparency in the government, more recently for accountability of the Delhi police and the Government of India regarding the grave human rights violations in Delhi riots and Jammu & Kashmir. For a movement that has done nothing but raise its voices against injustice, this latest attack is akin to freezing dissent.”

The company claims to have broken no national or international laws. The company works for human rights in India and more than 4 million Indians have supported its work in the last 8 years. Around 100,000 Indians are also known to have made a financial contribution to the company.

Amnesty International India is a part of the Nobel Prize winning movement. Therefore holds itself to the highest significant standards. The company claims that their work in India is to uphold universal human rights and build a global movement of people who take injustice personally. It states that these values are the same values that are enshrined in the Constitution of India and flow from a long rich tradition of pluralism, tolerance and peaceful dissent.

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