What is the role of enforcement Directorate? What are its powers? Difference between CBI and Ed?

By
Tosani Lal
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The Directorate of Enforcement (ED)

Enforcement Directorate

The responsibility for enforcing economic laws and fighting economic crime in India is empowered to The Directorate of Enforcement (ED) which is the law enforcement agency and economic intelligence agency [1]. It is part of the Department of Revenue, Ministry of Finance, Government of India. The  Directorate was established on 1 May 1956, when an ‘Enforcement Unit’ was formed, in Department of Economic Affairs with an object to  Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947. In the year 1957, this Unit was renamed as ‘Enforcement Directorate’ [2]. The head quarter is in New Delhi and has five regional offices headed by Special Directors of Enforcement in having regional offices Mumbai , Chennai , Kolkata , Chandigarh and Delhi. The Zonal Offices is headed by the Directors are at Ahmedabad, Bangalore , Chandigarh , Chennai , Kochi , Delhi , Panaji, Guwahati , Hyderabad , Jaipur , Jalandhar , Kolkata , Lucknow , Mumbai , Patna and Srinagar. The officers in this organisation are from The Directorate and other officers from different Investigating Agencies, viz., Customs & Central Excise, Income Tax, Police, etc.

After  FERA, 1973 , which was a regulatory law was repealed and its place was taken by  Foreign Exchange Management Act, 1999 (FEMA) In the International Anti- Money Laundering regime, Prevention of Money Laundering Act, 2002 (PMLA) was enacted, and entrusted for its enforcement to the Directorate [3]. The main object of the Act was to enforce two laws namely : the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA).

Key Role of Enforcement Directorate

  1. Investigate the provision of FEMA, 1999 which has been contravened and had come into force from 1st June, 2000. The penalties that are charged are up to three times the sum involved can be imposed
  2. While investigating the offence, the property attached shall be confiscated 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.
  3. A notice shall be given under the FERA 2002 for the alleged contravention of provision of the concerned Act which may result in penalties
  4. As per the Fugitive Economic Offenders Act, 2018 all the cases of fugitive shall be processed in order to preserve the sanctity of the rule of law in India.
  5. Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,1974(COFEPOSA) in regard to contraventions of FEMA  shall Sponsor cases of preventive detention
  6. In matters relating to money laundering and restitution of assets under the provisions of PMLA render cooperation to foreign countries and to seek cooperation in such matters.

Powers of Directorate Of Enforcement

Following are the powers of Directorate of Enforcement –

1. As per Sections 48 & 49 of the PMLA, the officers of the Directorate of Enforcement have been given the powers to investigate cases of Money Laundering.

In the matter of Suman Sehgal v Union of India[4]“For that matter, Section 37(3) does not refer to any express provision of the Income Tax Act. The only conclusion which can be therefore logically read is that there is no pre-condition that any ‘proceeding’ ought to be pending against a particular or specified individual nor is the pre- requisite for exercise of such power dependent upon existing judicial proceeding. As long as there are certain matters under the investigation of the concerned authority, it can invoke the power under Section 37(3).”

2. Summon any person whose attendance necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

In the matter of T.T.V. Dinakaran v. Enforcement Officer, Enforcement Directorate [5]“When there is suspicion with regard to the involvement of the petitioner in any of the transactions which are prohibited under the FERA Act, it is open to the authorities to summon him for enquiry. Since the documents are pertaining to him, it cannot be said that the investigation has no nexus with the documents called for from the petitioner. When an investigation is commenced, it is not possible for the authorities to come to the conclusion with regard to the involvement or the non-involvement of any person until the enquiry is completed. During the enquiry if the authorities get any information with regard to the involvement of any other individual, those individuals can also be summoned by the concerned officer in order to complete the enquiry. When Section 40(4) of the FERA Act specifically mentions that the proceedings taken by the authorities are judicial proceedings, it is not open to the petitioner to challenge the summons issued under the said proceedings as ab initio void. The petitioner cannot claim any right under Article 21 of the Constitution of India and Section 24 of the Evidence Act, as he is not an accused.”

Difference Between Enforcement Directorate Or CBI

  1. Central Bureau of Investigation (CBI) examines the corruption and high profile cases related white collar crimes or crime which is required by the Central or State to CBI to look into whereas Enforcement Directorate or ED is committed to prevent money laundering offences.
  2. The CBI operates under the Ministry of Personnel, Public Grievances and Pension whereas the ED is a part of Ministry of Finance.
  3. Enforcement directorate cannot register a case on its own, it is required by the agencies such CBI or state police to register an offence based on which the an Enforcement Case Information Report is filed by Enforcement Directorate whereas the CBI can register a complaint on its own or by request of the Courts.

“The views of the authors are personal“

Reference

  1. EnforcementDirector,http://www.enforcementdirectorate.gov.in/functions.html?p1=1202161584340568633(last visit March 14, 2020 4:00 PM )
  2. EnforcementDirector,http://www.enforcementdirectorate.gov.in/organisational_history.html?p1=1157101439240939219(last visit March 14, 2020 4:45 PM )
Tosani Lal
Tosani Lal
I am Tosani Lal from Amity Law School, Noida. My interest in the field of law started when I had shifted to the Gulf at a very early age. There I observed how laws of different countries govern the conduct of its people and also have a great impact on them. At law school, when I read the Constitution Of India I was deeply impressed by it and realized that to bring the change in the system you have to be part of the system. I have a keen interest in the Human Rights of women and children and with the help of my knowledge in the legal field I want to contribute to improving the deteriorating situation of society to do my bit to bring a positive change in society.
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