The Directorate of Enforcement is a multidisciplinary organization tasked with implementing the provisions of two special legislative laws: the Foreign Exchange Management Act (FEMA) of 1999 and the Prevention of Money Laundering Act (PMLA) of 2002. (PMLA).
This Directorate was established on 1 May 1956 by the Department of Economic Affairs to manage Foreign Exchange Law violations under the Foreign Exchange Regulation Act of 1947.
How powers of the Enforcement Directorate (ED) evolved?
The Enforcement Directorate’s powers have been separated in relation to the PMLA (2002) and FEMA (1999);
FERA (Foreign Exchange Regulation Act 1947) Stage:
- Since its inception in 1957 until 1973, when FERA (Foreign Exchange Regulations Act) was amended, the ED’s power has been limited.
- The ED has been given the authority to make arrests for FERA violations. It allowed Enforcement Officers to invade any business and arrest someone without a warrant.
- Without a warrant, even an Assistant EO may search any vehicle or individual.
- Even back then, the ED’s sphere of influence was largely confined to the business world.
The Foreign Exchange Management Act, 1999 (FEMA) Stage
- The post-liberalization period FERA was repealed in January 2000 because it was deemed to be a coercive and outdated statute.
- The Foreign Exchange Management Act (FEMA) replaced the Foreign Exchange Regulation Act (FERA). Under FEMA, forex breaches were treated as civil offences that could be compounded after a fine was paid.
- The ED no longer has the authority to arrest or detain citizens.
The Prevention of Money Laundering Act, 2002 (PMLA) Stage
- Following the 9/11 attacks, the world’s focus shifted to the funding of terrorism. Following the formation of the Financial Action Task Force (FATF), India was pressed to address the problem of terrorist financing.
- As a result, the Prevention of Money Laundering Act (PMLA) was enacted in 2005. It re-empowered ED with criminal prosecution powers.
- The case of Madhu Koda was the first in the organization’s history to lead to an arrest.
- The purpose of the PMLA was expanded with amendments in 2009 and 2013. It gave the emergency department (ED) more teeth.
- It is also the only Act in India that allows testimony taken before an investigating officer to be used as evidence in court.
- In 2017, the Supreme Court struck down a clause that allowed an arrested suspect to be released on bail only if the court was convinced that he or she was innocent.
- Between 2005 and 2017, just 2 to 3 people out of 120 people convicted by the ED were able to obtain bail before this decision.
Challenges and issues surrounding Enforcement Directorate
- To begin with, critics claim that the government has been abusing the international funding law to silence critics and non-governmental organizations who have raised questions about India’s rapid economic growth. For example, critics refer to the latest ED raid on Amnesty India.
- Second, case convictions: Between March 2011 and January 2020, the department conducted over 1,700 raids in conjunction with 1,569 separate investigations under the PMLA. During the same period, the ED has only succeeded in securing convictions in a meager 9 cases, the majority of which are relatively low-profile.
- Third, the ED lacks manpower: In numerous stories, anonymous ED sources have written about a lack of manpower, trouble establishing proof of a proper money trail, and inadequate litigation strategies. For example, over 1,000 cases have been investigated since the PMLA was implemented.
- Fourth, critics of the ED call it a weapon of political coercion because of its administrative power over the Ministry. The Panchkula land case, for example, drew the widespread condemnation of the Enforcement Directorate.
- Fifth, the ED lacks extraterritorial jurisdiction if the prisoner is located outside of India. The ED’s ability to investigate or detain convicts outside India’s borders is currently limited within the territory.
- Finally, funding is insufficient: The ED’s powers and obligations necessitate adequate funding, but past budgetary allocations for the ED’s functions are insufficient.
About Central Bureau of Investigation (CBI)
The Central Bureau of Investigation (CBI) is India’s top investigative agency.
It is overseen by the Department of Personnel, Ministry of Personnel, Pensions & Public Grievances, Government of India, which is part of the Prime Minister’s Office.
The Central Vigilance Commission, on the other hand, is in charge of investigations under the Prevention of Corruption Act.
It also serves as India’s nodal police body, coordinating investigations on behalf of Interpol member countries.
It has a conviction rate of 65 to 70%, which puts it on par with the best investigation agencies in the world.
FUNCTIONS OF THE Central Bureau of Investigation (CBI)
The CBI is an Indian government multidisciplinary investigative agency that looks into cases of corruption, economic crimes, and traditional crimes. Its functions in the battle against misconduct and corruption are usually limited to various crimes committed by Union Government officials, public sector corporations, and Union territories.
Following are the main roles of the Central Bureau of Investigation:
- To look into alleged misconduct, abuse, and bribery leveled against Central Government officials.
- To prosecute cases involving monetary and financial law violations, such as violations of laws relating to import and export regulation, central excise and customs, income tax, and FERA, among others. Such situations, on the other hand, are resolved by negotiations between concerned departments in response to their requests.
- To look at despicable acts perpetrated by trained offenders and organized gangs that have domestic and international consequences.
- Bringing together the efforts of numerous anti-corruption bodies and state police forces.
- Cases of global opinion have been taken for investigation with the consent of the state governments.
- Acting as Interpol’s “National Central Bureau” in India.
- Preserving crime statistics and disseminating criminal intelligence.
Cases Handled by the Central Bureau of Investigation (CBI)
- Anti-Corruption Crimes: To investigate cases of public officials and employees of the Central Government, Public Sector Undertakings, Statutory Corporations, or Government Agencies of India under the Prevention of Corruption Act.
- Economic Crimes: For the investigation of massive economic scandals and severe economic frauds, such as crimes involving Fake Indian Currency Notes, Bank Frauds, and Cyber Crime, bank frauds, Import-Export & Foreign Exchange violations, massive drugs, antiques, cultural property, and other smuggling goods, and so on.
- Special Crimes: For the prosecution of serious and organized crime under the Indian Penal Code and other rules, such as insurgency, bomb blasts, kidnapping for ransom, and criminal acts by the mafia/underworld on the order of Central or State Government or by the order of the court.
- Suo Moto Cases: CBI can take Suo Moto in the following cases:
- The CBI may be authorized by the Central Government to investigate a crime in a state, but only with the consent of the state government in question.
- Without the consent of the State, the Supreme Court and High Courts may order the CBI to investigate a crime anywhere in the world.
Challenges Faced by the Central Bureau of Investigation (CBI)
- Improving the agency’s reputation has been one of the agency’s greatest problems so far, as it has been chastised for its poor handling of many high-profile incidents, including the Bofors scandal, the Hawala scandal, the Sant Singh Chatwal case, the Bhopal gas tragedy, and the 2008 Noida double murder case (Aarushi Talwar).
- The CBI is excluded from the rules of the Right to Information Act, which means it is not accountable to the public.
- A significant contributor to the deficit is the administration’s mishandling of the CBI’s workforce, which includes an ineffective and unexpectedly biassed recruiting scheme that was used to get in preferred officers, probably to the organization’s disadvantage.
- The roles and authority of CBI representatives for prosecution are subject to the approval of the State Government, restricting the scope of the CBI’s investigation.
- Prior permission of the Central Government to initiate an examination or investigation into Central Public servants at the level of Joint Secretary and above is a major roadblock in the fight against corruption at all levels of the bureaucracy.
Enforcement Directorate vs. Central Bureau of Investigation
The Enforcement Directorate (ED) is dedicated to combating money laundering. ED is overseen by The Ministry of Finance.
The Enforcement Directorate cannot report a case by itself; it is mandated to do something by organizations such as the CBI or the state police, and the ED Case Information Report is submitted as a result.
While CBI investigates high-profile cases of corruption and white-collar crime that are referred to it by the Central or State governments. The Central Bureau of Investigation is part of the Ministry of Personnel, Public Grievances, and Pensions. The CBI has the authority to file a lawsuit on its initiative or at the demand of the courts.