Reporting By: Amit Kashyap.
The Directorate of Enforcement (ED) is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government Of India. It is composed of officers from the Indian Revenue Service, Indian Police Service and the Indian Administrative Service as well as promoted officers from its own cadre. The total strength of the department is less than 2000 officers out of which around 70% of officials came from deputation from other organizations while ED has its own cadre, too.
History Of ED
The origin of this Directorate goes back to 1st May, 1956, when an ‘Enforcement Unit’ was formed in the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA ’47). This Unit with Delhi as Headquarters was headed by a Legal Service Officer, as Director of Enforcement, assisted by an Officer drawn on deputation from Reserve Bank of India (RBI) and 03 Inspectors of Special Police Establishment. There were 02 branches – at Bombay and Calcutta.
In the year 1957, this Unit was renamed as ‘Enforcement Directorate’, and another branch was opened at Madras. In 1960, the administrative control of the Directorate was transferred from the Department of Economic Affairs to the Department of Revenue. With the passage of time, FERA’ 47 was repealed and replaced by FERA, 1973. For a short period of 04 years (1973 – 1977), the Directorate remained under the administrative jurisdiction of the Department of Personnel & Administrative Reforms. Presently, the Directorate is under the administrative control of Department of Revenue, Ministry of Finance, Government of India.
With the onset of the process of economic liberalization, FERA, 1973, which was a regulatory law, was repealed and in its place, a new law viz. the Foreign Exchange Management Act, 1999 (FEMA) came into operation w.e.f. 1st June 2000. Further, in tune with the International Anti Money Laundering regime, the Prevention of Money Laundering Act, 2002 (PMLA) was enacted and ED was entrusted with its enforcement w.e.f. 1st July 2005. Recently, with the increase in number of cases relating to economic offenders taking shelter in foreign countries, the Government has passed the Fugitive Economic Offenders Act, 2018 (FEOA) and ED is entrusted with its enforcement with effect from 21st April, 2018.
Objective
The statutory functions of the Directorate include enforcement of following Acts:
√The Prevention of Money Laundering Act, 2002 (PMLA): It is a criminal law enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. ED has been given the responsibility to enforce the provisions of the 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 Foreign Exchange Management Act, 1999 (FEMA): It is a civil law enacted to consolidate and amend the laws relating to facilitate external trade and payments and to promote the orderly development and maintenance of foreign exchange market in India. ED has been given the responsibility to conduct investigation into suspected contraventions of foreign exchange laws and regulations, to adjudicate and impose penalties on those adjudged to have contravened the law.
√The Fugitive Economic Offenders Act, 2018 (FEOA): This law was enacted to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. It is a law whereby Directorate is mandated to attach the properties of the fugitive economic offenders who have escaped from the India warranting arrest and provide for the confiscation of their properties to the Central Government.
√The Foreign Exchange Regulation Act, 1973 (FERA): The main functions under the repealed FERA are to adjudicate the Show Cause Notices issued under the the said Act upto 31.5.2002 for the alleged contraventions of the Act which may result in imposition of penalties and to pursue prosecutions launched under FERA in the concerned courts.
√Sponsoring agency under COFEPOSA: Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), this Directorate is empowered to sponsor cases of preventive detention with regard to contraventions of FEMA.
Organizational set up
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.
Zonal offices of the Directorate are at pune, Bengaluru, Chandigarh, Chennai, Kochi, Delhi, Panaji, Guwahati, Hyderabad, Jaipur, Jalandhar, Kolkata, Lucknow, Mumbai, Patna and Srinagar. These are headed by a Joint Director.
The Directorate has sub-zonal offices at Mangaluru,Bhubaneshwar, Kozhikode, Indore, Madurai, Nagpur, Allahabad, Raipur, Dehradun, Ranchi, Surat, Shimla, Vishakhapatnam and Jammu which are headed by a Deputy Director.
Special courts
For the trial of an offence punishable under section 4 of PMLA, the Central Government (in consultation with the Chief Justice of the High Court), designates one or more Sessions Court as Special Court(s). The court is also called “PMLA Court”. Any appeal against any order passed by PMLA court can directly be filed in the High Court for that jurisdiction.
Step-by-step procedure of filing a Complaint to the Enforcement Directorate
If a person wants to report a matter relating to the FEMA and PMLA, they have to register their complaint with an agency or the police other than the Enforcement Directorate. Before complaining to the Enforcement Directorate, a person has to complain to any other agency or the Police after which the Enforcement Directorate will investigate the matter and identify the accused.
PMLA comprises 157 sections of offences that relate to money laundering. If the offence registered in the complaint is one of these 157 offences, then the Enforcement Directorate has the power to take action on the complaint directly. The Officers have the power to investigate, search, and seize the property of the person against whom the complaint is made.
Sending a complaint to the Enforcement Directorate directly
While a person does not have an option to approach the Enforcement Directorate directly, they can send a complaint relating to illegalities in money laundering and foreign exchange to the following address:
Director,
Enforcement Directorate,
6th Floor, Lok Nayak Bhawan,
Khan Market,
New Delhi- 110003
A person may also file an application with a court for them to refer the matter to the Enforcement Directorate so that the matter can be investigated by the Enforcement Directorate agency.
Can the Enforcement Directorate take action on its own?
The Enforcement Directorate does not have the power to take action on its own (suo moto). It can only do so when a complaint is made. The Enforcement Directorate Agency may also attach the property of the accused and arrest them. The matter is resolved through adjudication by courts or the PMLA court.
The procedure of Investigation after the filing of Complaint
√Searching a place or a person: As soon as a complaint is registered with any agency or the Police, the Officers of the Enforcement Directorate have to report the same to the Magistrate under Section 157 of the Code of Criminal Procedure (CrPC). After obtaining the approval of the Magistrate, the Officers may search any place, vehicle, or break down any safe or locker in order to exercise their power.
The Officers are also empowered to search any person if there is a reason to believe that they could be involved in a crime. Under Section 19 of the PMLA, the Officers have the power to arrest a person if they have any reason to believe that they are involved in a crime that relates to money laundering.
√Seizing or confiscating any Property: The Enforcement Directorate Officers are entrusted with the power to seize or confiscate any property if they have reason to believe that it has a connection with the money laundered. Section 17 and 18 of the PMLA lay down provisions for the search and seizure of the property connected to the laundered money.
√Preparation of a Report: After the investigation has been conducted, the Officers shall prepare a report detailing the entire matter. It must also include the investigation undertaken by the officers, details of places or persons investigated, details of the property attached, if any, and details of the person arrested, if any.
√Taking action based on Report: Following the preparation of the report, the matter can either be resolved by the Enforcement Directorate’s own adjudicating body or it may be referred to the CBI court or the Supreme Court. The aggrieved party also has the option to file an appeal with a higher court. For the purpose of appealing, the agency has its own appellate panel.
In the event of a violation of FEMA’s provisions, the court may impose a fine of three times the amount involved, as well as a sentence of rigorous imprisonment of not more than seven years.
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Judgements In Criminal Law 