Enforcement Directorate

Why in news?

• 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).

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).

• It is part of the Department of Revenue, Ministry of Finance, Government Of India. It is composed of officers from the Indian Revenue Service, Indian Corporate Law Service, Indian Police Service and the Indian Administrative Service.

• 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.

• Composition: Besides directly recruiting personnel, the Directorate also draws officers from different Investigating Agencies, viz., Customs & Central Excise, Income Tax, Police, etc. on deputation.

• Other functions: 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.

Special courts

• 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.

Prelims Question

Q.Consider the following statements regarding Enforcement Directorate:
1.Its parent agency is the Ministry of Home Affairs.
2.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).
Which of the statements given above is/are correct?
a)1 only
b)2 only
c)Both 1 and 2
d)Neither 1 nor 2

Answer to the Prelims Question