Enforcement Directorate (ED) and Mandate

Source Enforcement Directorate (ED) and Mandate: The Hindu
GS II: Governance

Overview

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The Enforcement Directorate (ED) is a multi-disciplinary organization that investigates offences of money laundering and violations of foreign exchange laws in India.
It operates under the Department of Revenue of the Ministry of Finance.
The ED was established in 1956 as an ‘Enforcement Unit’.
Created to handle violations of exchange control laws under the Foreign Exchange Regulation Act (FERA), 1947.
It was later renamed as ‘Enforcement Directorate’ in 1957 and entrusted with the enforcement of the Prevention of Money Laundering Act, 2002 (PMLA) w.e.f. 1st July 2005.
The ED is headquartered in New Delhi
It has five regional offices in Mumbai, Chennai, Chandigarh, Kolkata, and Delhi headed by Special Directors of Enforcement.

Prevention of Money Laundering Act (PMLA)

The Prevention of Money-Laundering Act (PMLA) is a crucial legislation enacted in India to combat the severe issue of money laundering and the financing of illegal activities.
The act provides a legal framework to prevent and control money laundering, confiscate the proceeds of crime, and impose penalties on offenders.
The act was enacted on January 17, 2003, and came into force on July 1, 2005.
The act enables the government or public authority to confiscate the property earned from the illegally gained proceeds.
The act also provides for the establishment of a special court to try offences under the act.

The Prevention of Money-Laundering (Amendment) Act, 2012: This amendment expanded the definition of “proceeds of crime” and “money laundering” and increased the punishment for offences under the act.
The Prevention of Money-Laundering (Amendment) Act, 2015: This amendment introduced provisions for plea bargaining and allowed for the attachment and confiscation of property equivalent to the value of proceeds of crime.

The Prevention of Money Laundering Act, 2002 (PMLA) which provides for the prevention, detection, and prosecution of money laundering activities 1.
The Foreign Exchange Management Act, 1999 (FEMA) which regulates foreign exchange transactions in India.

The ED has been given the responsibility to enforce the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) by conducting investigations into suspected money laundering activities.
Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above ₹1 crore, the ED steps in.
The ED can also carry out search (property) and seizure (money/documents) if it suspects money has been laundered.
The ED has wide-ranging powers to investigate offences of money laundering and violations of foreign exchange laws in India.
However, it has been criticized for its lack of accountability and misuse of its powers to harass individuals and businesses.

The ED has been criticized for its wide-ranging powers and lack of accountability.
It has been accused of misusing its powers to harass individuals and businesses.
However, it remains an important institution in India’s fight against economic crimes.

An official statute that changes and unifies India’s foreign currency rules is called the Foreign currency Management statute (FEMA).
The act was enacted by the Parliament of India in 1999 by replacing the Foreign Exchange Regulation Act (FERA) of 1973
FEMA gives the Reserve Bank of India the authority to enact regulations and also permits the Indian government to enact foreign exchange laws that are consistent with the country’s international trade strategy.
The act provides a legal framework to regulate the flow of payments to and from a person situated outside the country.
Restricts an authorized individual from carrying out foreign exchange deals within the current account.
Empowers RBI to place restrictions on transactions from the capital account even if it is carried out via an authorized individual
All financial transactions concerning foreign securities or exchanges cannot be carried out without the approval of FEMA.
FEMA has been instrumental in encouraging external payments and foreign trades while filling all of the loopholes found in FERA.

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