The Directorate of Enforcement is an organization responsible for establishing economic laws, and regulations and battling economic crimes in India. It is an interdisciplinary organization that ensures proper enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA). Enforcement Directorate was established on 1 May 1956 under the Department of Revenue of the Ministry of Finance, operating from its headquarters in New Delhi and five regional offices in Mumbai, Chennai, Chandigarh, Kolkata, and Delhi.
The ED was established for the first time on May 1, 1956, with the confined mandate of administering the Exchange Control Laws in India. Over the years, the ED has expanded its role manifoldly through new enactments and the rising complexity of financial crimes. One major turning point to the ED's transformation was a legislative provision under the Prevention of Money Laundering Act, 2002 (PMLA), incidentally put into effect in 2005, which upgraded the powers and expanded the functions and responsibilities of the ED to the premier investigative agency responsible for money-laundering crimes within the territorial jurisdiction of the Republic of India.
Functions performed by the Enforcement Directorate are listed below:
The primary role of the Enforcement Directorate is to investigate contraventions of the legislation of the Foreign Exchange Management Act with involving penalties of up to three times the amount levied.
ED has the power to attach the assets of culprits found guilty of the violation of FEMA. The meaning of "attachment of the assets" is an order issued under Chapter III of the Money Laundering Act, which prohibits any transfer, conversion, disposition, or movement of property.
ED has the power to abrogate show-cause notices issued under the repealed FERA (Foreign Exchange Regulation Act, 1973).
ED may authorize cooperation with foreign countries in matters of money laundering and restoration of assets under the PMLA provisions.
The Enforcement Directorate is empowered under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) to provide assistance and sponsor cases of preventive detention regarding the contraventions of FEMA.
The ED is headed by a Director at the top, appointed by the central government, with headquarters based in New Delhi; the operations of the ED are carried out through several zonal and sub-zonal offices throughout the country. These kinds of offices have been established in different zones while some are sub-zonal to undertake cases within their own jurisdictions.
The structure in the ED comprises specialized units for the gathering of intelligence, investigation, legal affairs, and asset recovery. In this context, a major facility is the economic intelligence unit in the establishment that operates in close coordination with other financial intelligence agencies.
The Parliament of India has established certain important acts that govern the functioning of the Enforcement Directorate:
Foreign Exchange Management Act, 1999 (FEMA)
Prevention Of Money Laundering Act, 2002 (PMLA)
Fugitive Economic Offenders Act, 2018 (FEOA)
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)
The role of the ED is likely to become more critical in the days ahead with the increasing complexities of transnational financial crimes. The agency will emerge crucially instrumentative in the government's endeavours to counter the threats of black money, tax evasion, and financing of terrorism in India.
The ED engages itself on the platform of various international forums and through foreign agencies in the pursuit of cross-border financial crimes. It is a member of Egmont Group, which is a network of financial intelligence units internationally. That membership allows it to share information and best practices with member agencies across the globe.
The Enforcement Directorate plays a spearheading role in India's endeavour against economic offenses and financial crimes. Its dynamic mandate, widening powers, and rising vested interest in complex investigations have conferred upon it the status of a vital key balancing factor in the integrity of India's financial system. The ED, although mired with problems, is nurturing itself with the changing face of financial crimes to be more effective in its task of fighting money laundering and enforcing economic laws in India.
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