ENFORCEMENT DIRECTORATE

• The genesis of the Enforcement Directorate goes back to 1956 when an Enforcement Unit was set up, in the Department of Economic Affairs, for handling the Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947.
• In the year 1957, this Unit was renamed as the ‘Enforcement Directorate’.
• Currently, it is the part of Department of Revenue, Ministry of Finance.
• The Organization is mandated with the responsibility of enforcing the provisions of two special fiscal laws – the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA).
• The headquarter of the Enforcement Directorate is in New Delhi and the regional office is in Mumbai, Chennai, Kolkata and Chandigarh.

Objectives of Enforcement Directorate

Enactment of FEMA and PMLA

• FERA in 1947 was repealed and it is replaced by FERA 1973. However, FERA 1973 was repealed, and it is replaced by Foreign Exchange Management Act, 1999 (FEMA), in line with the International Anti-Money Laundering regime, the Prevention of Money Laundering Act, 2002 (PMLA) was enacted.

Power to officers under FEMA and PMLA

• ED enforces two laws, FEMA and PMLA.
• FEMA is civil law. ED has quasi-judicial powers to investigate suspected contraventions of the Exchange Control Laws and Regulations and impose penalties on those adjudged guilty.

Function of Enforcement Directorate

• To Investigate the violation of the provisions of foreign exchange management act (FEMA) that came into effect in 2000. The violations of provisions of FEMA are dealt with by the designated authorities and involve penalties up to the three times the sum involved.
• Enforcement directorate also investigates offences under PMLA which came into force in 2005. If the crime is a Scheduled Offence, the concerned officers can seize the property and prosecute the individual involved in money laundering.
• Under the Fugitive Economic Offenders Act 2018, the ED processes cases of fugitives from India. The Act helps economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian Courts and preserving the spirituality of the rule of law in India.
• ED also give cooperation to foreign countries in matters related to money laundering and surrender of assets under the provisions of PMLA and seeks cooperation in such matters.

Enforcement Directorate VS Central Bureau of Investigation

• CBI work under the Ministry of Home Affair whereas ED work under the Ministry of Finance
• The prime aim of the Ed is the enforcement of FEMA (Foreign exchange management Act) and PMLA (Prevention of money laundering act) 2002, whereas CBI is the foremost investigative police agency in India.

Enforcement Directorate

What is an Enforcement Directorate (ED)?

• Enforcement Directorate (ED) is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
• On 1st May 1956, an ‘Enforcement Unit was formed in the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947. In 1957, it was renamed as ‘Enforcement Directorate.
• ED enforces the following laws:

1. Foreign Exchange Management Act (FEMA), 1999.
2. Prevention of Money Laundering Act (PMLA), 2002.

• The Headquarters of Enforcement Directorate (ED) is situated in New Delhi and is headed by the Director of Enforcement.
• The director is appointed by the Appointments Committee of the Cabinet headed by the Prime Minister.

Why in news?

• The Supreme Court did not intervene with the government’s decision to “retrospectively extend” the tenure of Sanjay Kumar Mishra as the Director of the Enforcement Directorate (ED), saying his tenure is anyway drawing to a close in November 2021.
• In a judgment pronounced, a Bench led by Justice L. Nageswara Rao, however, said Mr. Mishra should not be given any further extension at the top of the specialized Central agency which investigates sensitive cases under the Prevention of Money Laundering Act.
• The court, however, upheld the power of the government to extend his tenure beyond two years.
• “As the tenure of appointment of Director of Enforcement is not a maximum period of two years, a person can be appointed as Director of Enforcement for a period of more than two years... The decision to extend the tenure of the respondent [Mishra] is pursuant to the recommendation made by the high-powered committee,”
• However, the court said the power to grant extensions for a “reasonable period” to the ED Director should be done rarely and only after recording the reasons.