Topics Covered: Statutory, regulatory and various quasi-judicial bodies.
What to study?
For Prelims: ED- objectives, functions and composition.
For Mains: Controversies and issues surrounding it’s independence and misuse, ways to address them.
Context: Yes Bank founder Rana Kapoor was recently placed under arrest by the Enforcement Directorate.
- He was charged under the Prevention of Money Laundering Act (PMLA).
- He was also booked for cheating under the IPC, along with accepting illegal gratification and misconduct under the Prevention of Corruption Act.
Mr. Kapoor is under the scanner for granting large loans to the crisis-hit Dewan Housing Finance Limited (DHFL), allegedly in exchange for kickbacks to the tune of ₹600 crore that were paid into accounts of his family members. It is argued that sub-standard properties were mortgaged by DHFL for the loans that it took.
About Enforcement Directorate:
It is a Multi Disciplinary Organization mandated with the task of enforcing the provisions of two special fiscal laws – Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).
The origin of this Directorate goes back to 1st May, 1956, when an ‘Enforcement Unit’ was formed, in Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA ’47).
In the year 1957, this Unit was renamed as ‘Enforcement Directorate’. The administrative control of the Directorate was transferred from Department of Economic Affairs to Department of Revenue in 1960.
For a short period of 04 years (1973 – 1977), the Directorate also remained under the administrative jurisdiction of Department of Personnel & Administrative Reforms.
The Directorate enforces two laws;
- FEMA, a Civil Law having quasi judicial powers, for investigating suspected contraventions of the Exchange Control Laws and Regulations with the powers to impose penalties on those adjudged guilty.
- PMLA, a Criminal Law, whereby the Officers are empowered to conduct enquiries to locate, provisionally attach/confiscate assets derived from acts of Schedules Offences besides arresting and prosecuting the Money Launderers.
Besides directly recruiting personnel, the Directorate also draws officers from different Investigating Agencies, viz., Customs & Central Excise, Income Tax, Police, etc. on deputation.
- Processing cases of fugitive/s from India under Fugitive Economic Offenders Act, 2018.
- Sponsor cases of preventive detention under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974(COFEPOSA) in regard to contraventions of FEMA.
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.
- What is FEMA?
- What is PMLA?
- What is COFEPOSA?
- Historical background of ED.
- Which all departments have administered it?
How ED has become the weapon of choice today? Discuss.
Sources: the Hindu.