The Enforcement Directorate was established in 1956 with its headquarters located in New Delhi. It is tasked with enforcing the Foreign Exchange Management Act of 1999 (FEMA) and some aspects of the Prevention of Money Laundering Act. The Enforcement Directorate has been given the responsibility of investigating and prosecuting PML-related offences. The Directorate is under the operational administrative supervision of the Department of Revenue; the Department of Economic Affairs is responsible for the policy elements of FEMA, its law, and amendments. Nonetheless, the Department of Revenue is in charge of Prevention of Money Laudering Act-related policy matters.
To collect, develop and disseminate intelligence relating to violations of FEMA, 1999, the intelligence inputs are received from various sources such as Central and State Intelligence agencies, complaints etc.
To investigate potential breaches of the Foreign Exchange Management Act of 1999 including activities such as "hawala" foreign exchange racketeering, non-realization of export revenues, and non-repatriation of foreign exchange, as well as other forms of FEMA 1999 violations.
To adjudicate instances involving breaches of FERA 1973 and FEMA 1999.
To enforce the fines imposed after the end of adjudication processes.
To handle instances of adjudication, appeals, and prosecution under the former FERA, 1973.
To process and propose cases for preventive detention in accordance with the Conservation of Foreign Exchange and Prevention of Smuggling Act (COFEPOSA) .
To conduct a survey, search, seizure, arrest, and/or prosecution against a PMLA violator.
To give and seek reciprocal legal assistance to/from contracting nations for the attachment/confiscation of criminal proceeds and the transfer of accused people under the PMLA.
Prevention of Money Laundering Act (PMLA), 2002
The Prevention of Money Laundering Act (PMLA), 2002 was enacted in January, 2003. PMLA defines offence of money laundering as whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
It requires banks, financial institutions, and intermediaries to verify and maintain records of the identities of all their customers and all transactions, as well as to provide the Financial Intelligence Unit-India with details of such transactions in a defined manner (FIU-IND). It authorises the Director of FIU-IND to levy a fine on a bank, financial institution, or intermediary if they or any of its officials fail to comply with the aforementioned requirements of the Act.
PMLA authorises selected officials of the Directorate of Enforcement to conduct investigations in situations involving money laundering offences and to seize the associated assets. The PMLA requires the establishment of an Adjudicating Authority to exercise the jurisdiction, power, and authority vested in it, primarily to affirm attachment or order the forfeiture of attached property. It also calls for the establishment of an Appellate Tribunal to hear appeals against the decisions of the Adjudicating Authority and other authorities such as the Director of FIU-IND.
The PMLA contemplates the designation of one or more courts of sessions as a Special Court or Special Courts to hear offences punishable under the PMLA and offences with which the accused may be tried concurrently under the Code of Criminal Procedure 1973. The PMLA authorises the Central Government to enter into an agreement with the government of any foreign country for the purposes of enforcing the provisions of the PMLA, exchanging information for the prevention of any offence under the PMLA or under the corresponding law in force in that country, or investigating cases relating to any offence under the PMLA.
The PML Act aims to fight money laundering in India and has three primary objectives: to prevent and regulate money laundering; to deter money laundering; and to prosecute money laundering offenders. To collect and seize the assets acquired via money laundering; and to address any other issues related to money laundering in India. The Act also provides for penalties under section 4.
Under Section 50 of the PMLA, the ED may also conduct a search and seizure without first notifying the accused. It is not necessary to summon the person first and then start with the search and seizure.
International Cooperation and Money Laundering
Financial Action Task Force (FATF)
The Financial Action Task Force (FATF) is an inter-governmental body which sets standards, and develops and promotes policies to combat money laundering and terrorist financing. India became member in 2010.
The Financial Intelligence Unit-India (FIU-IND) is a member of the Egmont Group, an international organisation that encourages FIU cooperation. The Egmont Group is a worldwide network that promotes better communication and cooperation amongst FIUs. The objective of the Egmont Group is to create a platform for FIUs from across the globe to enhance their assistance for their respective governments in the fight against money laundering, terrorism funding, and other financial crimes. In May of 2007, India became a member of the Egmont Group.
Asia/Pacific Group on Money Laundering (APG)
The Asia/Pacific Group on Money Laundering (APG) was officially established as an autonomous regional anti-money laundering body in February 1997 at the Fourth (and last) Asia/Pacific Money Laundering Symposium in Bangkok , Thailand . The objective of the APG is to support the adoption, implementation, and enforcement of globally recognised anti-money laundering and anti-terrorist financing standards outlined in the Financial Action Task Force's recommendations (FATF). The APG is an autonomous, voluntary, and cooperative worldwide organisation founded by agreement among its members. It does not derive from an international treaty nor is it part of any international organisation.
Foreign Exchange Management Act
FEMA was implemented in lieu of the Foreign Exchange Regulation Act (FERA). In 1991, the government initiated the liberalisation of the Indian economy. The LPG (Liberalisation-Privatisation-Globalisation) programme meant to make shift from regulation to management. The Act has accelerated international exchanges in India, resulting in an abundance of foreign exchange reserves.
The Parliament has enacted the Foreign Exchange Management Act,1999 to replace the Foreign Exchange Regulation Act, 1973. This statute went into effect on June 1, 2000. The Central Govt. have established the Directorate of Enforcement with Director and other officers, for the purpose of taking up investigations of cases under the said Act.
The purpose of the Act is to consolidate and amend the legislation concerning foreign exchange in order to facilitate external trade and payments and to promote the orderly growth and maintenance of India's foreign currency market.
This Act applies to the whole of India and to any branches, offices, and agencies outside India that are owned or managed by an Indian resident. It also applies to violations committed outside of India by those to whom the Act applies.
With increasing economic commerce and movement, there is also a greater risk of misappropriation of money. As India's top financial investigating agency, the Enforcement Directorate operates in strict accordance with the Indian Constitution and laws. As a multidisciplinary institution it is charged with investigating offences related to money laundering, foreign exchange legislation crimes, as well as those o fugitive economic offenders.