Enforcement Directorate
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In this article, Himanshu Juneja discusses the organisational setup and functions of Enforcement Directorate.

About Enforcement Directorate

It is an agency which enforces laws related to the economy and fights with the problems related to economic crimes in India. It is also an Economic intelligence agency which works for the enforcement of the provisions of two main laws for the economic development of the country. Two main laws are as follows:

  • Foreign Exchange Management Act (FEMA), 1999,
  • Prevention of Money Laundering Act (PMLA), 2002.

Headquarter and other offices

This agency is a part of the Revenue Department, Financial Ministry.

  • Its HQ is situated at New Delhi which is headed by the Director of Enforcement.
  • five regional offices are in Mumbai, Chennai, Kolkata, Chandigarh, and Delhi. These offices are headed by special Directors of Enforcement.
  • its zonal offices are in Ahmedabad, Bangalore, Chandigarh, Delhi, Lucknow, Mumbai, Patna, Srinagar, Panaji, Guwahati, Hyderabad, Kochi, Chennai, Jaipur, Jalandhar, and Kolkata. These offices are headed by Joint Director.
  • Its sub-zonal offices are in Bhuvneshwar, Kozhikode, Indore, Madurai, Nagpur, Surat, Allahabad, Raipur, Ranchi, Dehradun, and Shimla. These offices are headed by Deputy Director.

Recruitment of the officers is directly and by drawing officers from other investigation agencies. So, 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.

History

Its history can be traced from 1956 when on the 1st May of 1956, a unit (Enforcement unit) was formed in Economic Affairs Department. It was formed for the control some issues relating to the violation of the provisions of FERA (Foreign Exchange Regulation Act),1947. This Enforcement unit was renamed as “Enforcement Directorate” in 1957 and the administrative control was transferred to Revenue department from Economic Department in 1960. Later the FERA Act was repealed after 1977 and a new Act was passed named FEMA(Foreign Exchange Management Act),1999 which came into effect from 1st June of 2000. Further the Prevention of Money Laundering Act, 2002 was passed by the parliament to prevent and control money laundering in India and to deal with such issues. Later the responsibility for the enforcement of provisions of both acts was given to the Enforcement Directorate on 1st July of 2005 and since today it is working for the enforcement of the provisions of both acts.

Characteristics of Enforcement Directorate

  • It is an investigation agency which investigates cases related to finance.
  • It is a part of Revenue Department of Finance ministry.
  • It mainly deals with two laws which are, FEMA(Foreign Exchange Management Act), and PMLA(Prevention of Money Laundering Act).
  • It works for the enforcement of provisions of these two acts.
  • It has its own courts for trial and also its own appellate tribunals.
  • It investigates and files suits in courts against those who violate the rules of FEMA and PMLA.
  • It resolves the matters or issues by adjudication and has provision for appeal in both acts.
  • It works to achieve the objects of both acts.

Way of Working: Modus Operandi

  • Work with upgraded systems and methods to improve work performance and remove outdated systems and methods.
  • The team working for better communication with each other.
  • The process of learning from Global best practices to sharpen their investigation skills.
  • Delegate tasks and strictly follow rules to deal with issues to get excellence in its working.
  • Deals with all laws for which they are responsible and try to achieve the better result.
  • Fair and reasonable investigation in all cases while investigating.
  • It collects the facts and reveals the truth without any fear.
  • Takes right decision without favoring anyone.
  • Fair actions, without bias.
  • Does not allow the abuse of power.
  • The team is responsible for the consequences of their actions and answerable for an outcome.
  • Work with the discipline to achieve their goals.

How to report matter to Enforcement Directorate

Can a person directly approach the Enforcement Directorate?

A person cannot directly approach Enforcement Directorate. But complaints relating to illegalities in foreign exchange and money laundering may be sent to the Enforcement Directorate at the following address:

Director,

Enforcement Directorate,

6th Floor, Lok Nayak Bhawan,

Khan Market,

New Delhi- 110003

Website: http://finmin.nic.in

An application can also be filed with the court to refer the matter to Enforcement Directorate and to investigate the matter by Enforcement Directorate agency.

Complaint to any other agency : If someone wants to report a matter related to the violation of FEMA or PMLA act, he has to register a complaint with any other agency or Police than ED. PMLA contains 157 sections regarding the offences related to the money laundering. These offences are called schedules or predicate offences. If such registered offence is one of any schedules or predicate offences than Enforcement Directorate can take action against such person. Officers can investigate, search and confiscate the property of such person.

Does Enforcement Directorate take action, suo motu or on a complaint?

ED can not take an action suo motu. One has to complaint to any other agency or Police first and then ED will investigate the matter and will identify the accused. Agency 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 the way of adjudication by courts or PMLA court.

Jurisdiction

Both FEMA or PMLA applies to the whole India including Jammu and Kashmir. So, the Enforcement Directorate 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 whether he is a politician or a businessman. All the public servants come under the jurisdiction of the agency if they are involved in any offence related to the money laundering.

Job opportunities for Law Graduates in Enforcement Directorate

Enforcement Directorate is increasing his offices in many other states and cities. Many zonal and sub-zonal offices have opened by the order of Central Govt and soon they will function properly. So, there is a lot of opportunities for Law Graduates. It may soon hire some legal consultant and legal advisors.

Law Graduates can get more opportunities as a legal advisor, a judge in adjudication authorities and in appellate tribunals of the agency.

Procedure followed by Enforcement Directorate for investigation

Search of place and person

After the registration of complaint to an agency or police for schedules or predicate offence under the PMLA, first of all, they have to report magistrate under section 157 of the Code of Criminal Procedure. After the approval of Magistrate, the officers may search any place, building, vehicle, and vessel or break down any locker, safe or almirah or any other receptacle for exercising his power. They are empowered to search a Person if they have reason to believe that he may be involved in any crime.

Seize property

Officers can seize any property if they have reason to believe that such property has any relation to the money laundering. Officers will follow the Code of Criminal Procedure, 1973 while confiscating or attaching any property. Section 17 and 18 of PMLA has provisions for the search and seizure of any property or person.

Section 19 of the PMLA, empowers the officers to arrest a person if they have reason to believe that such person is involved in a crime related to money laundering.

Investigation powers of Enforcement Directorate officers

Section 36 and 37 of FEMA deals with the establishment of this agency and empowers its officers to investigate the matters which contravene the provisions of this act and any other rule or order passed by the authority by exercising of the power given under this act.

Power to investigate

The officers below the rank of assistant directors are not allowed to investigate the matter and all other upper-rank officers are allowed to investigate including director of Enforcement.

Investigate any person or place

An officer of Enforcement Directorate is empowered to investigate any place, building, vehicle or any other area to find evidence for the further proceeding. He can break down any locker or almirah to find evidence and take an oath of any person.

Power to arrest a person

After investigation or at any time of investigation if they found any person guilty of a crime related to money laundering, they have the power to arrest such person and can start a legal proceeding against such person in court.

What actions are taken on the report prepared by Enforcement Directorate officer

After the investigation of the matter, officers make a report of the matter which includes the detail of the report, investigation done by officer, places, and persons investigated, attachment report of the attached property, report of an arrested person.

After the preparation of the report matter may be adjudicated in ED’s own adjudicating authority or the case may be referred to CBI court or Apex court also. The aggrieved party of the case may go to the higher court for the appeal.  The agency has its own appellate tribunal for the purpose to take an appeal.

The court on the decision of the matter may impose fine thrice of the sum involved in case of contravention of the provisions of the FEMA and may punish with rigorous imprisonment not exceeding seven years.

Functions and powers of the Agency

This investigation agency works for the enforcement of provisions of the FEMA and PMLA. It is working to achieve the objects of these acts and impose penalties on those who violate the provisions of these acts.

Some basic functions and powers are to investigate the matter, search any suspected place or person, confiscate any property purchased from laundered money, arrest any accused or person relates to such crime, file suit against accused person and some other function of its adjudication authorities and appellate authorities, such as to decide any case by taking evidence, power to penalize victim with imprisonment and fine. Some functions, procedure, and powers given in dealing acts are such as.

Investigate the contravention of FEMA

The investigation agency and its officers investigate the contravention of the provisions of Foreign Exchange Management Act,1999. If an individual or any other person violates the provisions of FEMA, officers deal with such contravention of any provision by the way of adjudication. Enforcement Directorate designates such adjudicative authority which is empowered to adjudicate and impose penalty up to thrice of the sum involved.

Investigate the offences under PMLA

The offences covered under this act are of criminal nature. The agency investigates the offences related to money laundering covered under any section of the Prevention of Money Laundering Act, 2002. Under section  5 of this act, agency and its officers are empowered to take action of attachment and confiscation of the property if they have reason to believe that such property is derived from laundered money. Further, they are also empowered to prosecute the person involved in the crime of money laundering. The Involved person may be punished with a term not less than 3 years and may extend to 7 years and with fine which may extend to rs. 5 lac. The punishment may be rigorous.

Adjudication of show cause notice under FERA

That act(Foreign Exchange Regulation Act) was passed by Indian Parliament in 1973 and came into force from 1st January 1974 and was repealed and replaced by the Foreign Exchange Management Act, 1999. It was repealed by the Govt. of Atal Bihari Vajpayee in 1998. FEMA adjudicates the show cause notices issued by the FERA authorities to many MNCs and to others up to 31-05-2005 for the alleged contravention of this act. The adjudication authorities may impose penalties.

Sponsor cases under COFEPOSA in regard to contravention of FEMA

COFEPOSA(conservation of foreign exchange and prevention of smuggling activities) act was passed in 1974 during the administration of Indira Gandhi. This act was passed to retain foreign currency in India and to prevent smuggling activities. Agency act as sponsor to cases of preventive detention under COFEPOSA in regard to contravention of the provisions of Foreign Exchange Management Act, 1999.

Cooperation with foreign countries to prevent money laundering crimes

According to section 56 of Prevention of Money Laundering Act, 2002, Central Govt. may enter into an agreement with any foreign country for enforcing the provisions of this act. Hence, agency cooperates with other foreign countries in matters relating to money laundering and restitution of assets. Agency can share information to prevent any crime related to money laundering and seek cooperation in such matters.

Case study

Jagdish Bhola Drug Racket Case

A former DSP of Punjab was arrested by Punjab police while raided at his home. Fatehgarh Police found drugs of rs. 100 crore at his residence in Mohali. A Deputy Director(Niranjan) of ED filed a case against him with many other politicians and NRI who supported him in this racket.

Niranjan has to face so many problems including his transfer from Jalandhar to Kolkata which was cancelled by the Punjab and Haryana High Court. He did plan not only to investigate in that matter but also to attach property of Rs. 1000 crore or more of many politicians of Punjab. He did all as an investigation officer of ED but later on the decision of the Court, his duty was changed to as a supervisor of the case where he could only supervise the case instead of investigating the case. The case is still going on and many other politicians with Bhola are under police investigation. Some are in Judicial custody while many in jail also. The matter is related to a drug racket of Rs. 6000 crore or more.

Vijay Mallya case

Vijay Mallya was a big businessman and also a politician of India as a member of Parliament running many of companies including airline service and liquor business in India. He took a loan of Rs. 9000 crore from many banks and did not return. Later he leaves India and he has declared a defaulter and now Indian Govt. is demanding him back from London court or Govt.

Enforcement Directorate has also filed a case against Mallya charging him with money laundering under PMLA. ED registered a case on the basis of CBI probe which alleged him and A. Raghunathan(CFO of Kingfisher Airlines) with a default of 900 crores with IDBI Bank officials.

Conclusion

Directorate Enforcement is a department of our Govt. which is working to develop our nation. As we have discussed its structure and working with its functions and powers, now we can say that it is working with some specific objects. This is Govt supporting agency to control and prevent money laundering in India. It is working with a good and clear vision to serve the nation. Many officers from many different departments work to support this agency. They investigate and resolve the matter with the process of adjudication and also perform many other functions by using their power given to them by an agency. It is functioning to strengthen our economy. It punishes fraud persons involving in money laundering and those who contravene the provisions of FEMA and PMLA. Its work for controlling and preventing money laundering and as a guardian of two important laws or acts will make India better and develop our economy.

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