To enforce the provisions of Foreign Exchange Management Act, 1999 the Central Government has established a multi-dimensional organization – the Directorate of Enforcement. Officers of Enforcement Directorate are also empowered to assist the enforcement of the provisions of Prevention of Money Laundering Act, 2002. Since 2011 the Directorate has turned to a force with 2064 officers and 49 offices in India. Enforcement Directorate will also be responsible for the enforcement of the Fugitives Economic Offenders bill 2018 when it becomes a law, the object of which is to control fugitive economic offenders and white collar offenders.
The Economic Affairs Department in 1956 formed an Enforcement Unit to deal with violations of exchange control laws under the Foreign Exchange Regulation Act, 1947. Later in 1957 it was named as Enforcement Directorate, soon after which the transfer of its control to the Revenue Department. Since July 2005 the Enforcement Directorate is working for the enforcement of Foreign Exchange Management Act, 1999 and Prevention of Money Laundering Act, 2002.
Areas of law
Foreign Exchange Management Act, 1999 is a civil law that entrusts the Directorate with a quasi-judicial power to inspect violations of exchange control laws. The Directorate is attributed with the power to levy penalties from convicts. They have the power to impose penalties up to 3 times the sum that is involved.
Being a criminal law, the Directorate has the power to inquire, locate, provisionally attach or confiscate assets, arrest and prosecute the offenders under the Prevention of Money Laundering Act, 2002.
Working of Directorate
Functions and Powers
Apart from adjudicating upon the infringement of Foreign Exchange Management Act, 1999 and Prevention of Money Laundering Act, 2002 the Directorate has the power to conduct prosecutions and impose penalties under Foreign Exchange Regulation Act, 1973 for show cause notices issued till 31st May 2002. Directorate also sponsors cases of preventive detention in case of violations of Foreign Exchange Management Act, 1999 under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. In case of money laundering or restitution of assets under the Prevention of Money Laundering Act, it extends and receives cooperation to foreign countries.
How to initiate an action?
Once an agency or police receive a complaint the Directorate comes into the picture. The inquiry starts after an Enforcement Case Information Report is registered. It inquires upon the issue, find out the accused and initiates steps under the respective Act under which the matter falls. Suo motto action cannot be taken up by the Directorate. After completion of the proceedings, the matter will be adjudicated either by the court or a court under Prevention of Money Laundering Act. The Directorate is on its process of moving forward with an amendment to the Prevention of Money Laundering Act which would permit the Directorate’s case to stand even if the same case before CBI falls through. Enforcement Directorate has a duty to submit final report or charge-sheet before the Court which is designated as Special Court by the Central Government in consultation with the Chief Justice of the High Court under Section 43, the Prevention of Money Laundering Act.
Money laundering is indisputably a threat that carves the financial systems, integrity, and sovereignty of a country. The support of officers from different departments within the organization is an added benefit as they can cooperate with each other to achieve its objectives. Enforcement Directorate works without bias to carry out a fair and reasonable investigation. It is also pertinent that the organization is accountable for the consequences of their actions and answerable for outcomes.
By Aswathy Suresh