ENFORCEMENT DIRECTORATE

Why in News?                                                                                                        

The Enforcement Directorate (ED) on Thursday arrested Delhi Chief Minister Arvind Kejriwal in the money laundering case related to the alleged liquor policy scam.

What is Enforcement Directorate?

• The Enforcement Directorate was established in the year 1956 as an ‘Enforcement Unit’ under the Department of Economic Affairs.
• Later, in 1957, this Unit was renamed as ‘Enforcement Directorate.
• Presently, it is under the administrative control of the Department of Revenue (under the Ministry of Finance) for operational purposes.

The statutory functions of the agency include enforcement of following Acts:

• The Prevention of Money Laundering Act, 2002 (PMLA): ED has been given the responsibility to enforce the provisions of the PMLA. It conducts investigation to trace the assets derived from proceeds of crime and ensures prosecution of the offenders and confiscation of the property by the Special court.
• The Foreign Exchange Management Act, 1999 (FEMA): The ED has been entrusted with the responsibility of investigating suspected violations of foreign exchange laws and regulations. Additionally, it has the authority to adjudicate cases and impose penalties on those found to have contravened these laws.
• The Fugitive Economic Offenders Act, 2018 (FEOA): Under this law, the agency is mandated to seize the properties of fugitive economic offenders who have fled from India to evade arrest.
• Sponsoring agency under COFEPOSA: Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), the ED is empowered to sponsor cases of preventive detention regarding contraventions of FEMA.
• In 2022, the Centre has amended a 2006 notification to list 16 entities which will have to mandatorily share information with the Enforcement Directorate (ED) under Section 66 of the PMLA. Among these are the National Investigation Agency (NIA), the Competition Commission of India (CCI), the Serious Fraud Investigation Office (SFIO), and State Police Divisions. This has further widened ED’s powers.
• Again, in 2022, the Supreme Court upheld the amendments made to the PMLA through Finance Acts. It gives the ED virtually unchecked powers of summons, arrest, and raids, and makes bail nearly impossible while shifting the burden of proof of innocence on to the accused rather than the prosecution.
• Section 50 of the PMLA provides powers of a civil court to the ED authorities for summoning persons suspected of money laundering and recording statements. However, the Supreme Court held in Vijay Madanlal Choudhary v. Union of India (2022) that ED authorities are not police officers and an inquiry under the Section 50 of the PMLA is not ‘investigation’ in strict sense of the term for initiating prosecution.
• In court, any statement given by an accused to the police is not admissible as evidence, but a statement made to an ED authority is considered admissible. While the accused can access a copy of the First Information Report (FIR), the Enforcement Case Information Report (ECIR) is rarely made available to them.
• The ED Director is appointed by the central government on the recommendation of a committee: chaired by the Central Vigilance Commissioner and members comprising of Vigilance Commissioners, Home Secretary, Secretary DOPT and Revenue Secretary.