The Supreme Court has warned the Enforcement Directorate (ED) against using the court as a political platform and politicizing the issue. Critics argue the ED selectively targets opposition party leaders and has low conviction rates. To improve the ED's functioning, steps include enhanced transparency, judicial scrutiny, capacity building, protection from political influence, and prioritizing quality prosecution.
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Picture Courtesy: THE HINDU
The Supreme Court has warned the Directorate of Enforcement against using the Court as a political platform and cautioned against politicizing the matter.
In 1956, the government set up an 'Enforcement Unit' under the Department of Economic Affairs, to handle cases related to foreign exchange.
It is headed by the Director of Enforcement, who is an officer of the rank of Additional Secretary to the Government of India.
The ED's headquarters is located in New Delhi.
The ED enforces:
Search & Seizure => ED officers can search properties and seize documents, records, or funds if they suspect money laundering.
Power to Arrest => ED can arrest someone if they have "reason to believe" that the person has committed an offense under PMLA.
Summoning => ED can call anyone to give evidence or produce documents.
Selective Targeting => Critics point out that a large number of cases are filed against leaders of opposition parties, leading to suspicions that the ED is targeting political opponents rather than focusing purely on crime.
Low Overall Conviction => The Union Ministry of Home Affairs informed the Lok Sabha in August 2024, that in the past ten years as many as 5,297 cases were registered under the Prevention of Money Laundering Act (PMLA) while conviction was secured in just 40 cases.
ECIR Transparency (Enforcement Case Information Report) => ED does not provide a copy of the ECIR (which is like an FIR for PMLA cases) to the accused.
Burden of Proof => Under PMLA, the burden of proof shifts to the accused, the accused have to prove their innocence, rather than the ED having to prove their guilt.
Overreach of Powers/Jurisdiction => ED sometimes investigates "ordinary crimes" that don't directly involve money laundering, suggesting the PMLA's scope is being stretched too far.
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Challenges in Prosecuting Financial Crimes: Major Reason behind low conviction rate as per ED
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Vijay Madanlal Choudhary case (2022) => Upheld the validity of PMLA, confirming that the ED officers are not considered "police officers." Statements made to them can be used in court, unlike statements made to police.
Pankaj Bansal case (2023) => Made it mandatory for the ED to provide the accused with written grounds for their arrest.
Tarsem Lal case (2024) => Supreme Court stated that the ED loses its power to arrest a person once the Special Court has taken official notice ("cognizance") of the case. After that, the ED must seek judicial permission for any arrest.
Enhanced Transparency & Accountability => More transparent in its operations, by disclosing the ECIR to the accused. It also needs clear rules for selecting cases to avoid accusations of bias.
Judicial Scrutiny & Oversight => Strictly follow Supreme Court guidelines, especially recent ones like the Tarsem Lal judgment, which emphasize judicial oversight.
Capacity Building => Needs more resources, including money and staff, and specialized training for its officers to handle complex financial investigations effectively.
Insulating from Political Influence => To ensure its independent functioning, measures should be taken to protect the ED from political interference, by strengthening the security of tenure for its key officers.
Focus on Quality Prosecution => Prioritize building strong cases with solid evidence rather than just filing a high number of cases, to improve the low conviction rates and ensure that justice is served.
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Source: THE HINDU
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PRACTICE QUESTION Q. Consider the following statements about the Enforcement Directorate (ED): 1. The ED enforces the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA). 2. It functions under the Ministry of Home Affairs. 3. The ED has powers to provisionally attach properties believed to be "proceeds of crime." How many of the above statements are correct? A) Only one B) Only two C) All three D) None Answer: B Explanation: Statement 1 is correct: The ED is responsible for enforcing the PMLA (deals with money laundering), and FEMA (regulates foreign exchange transactions). Statement 2 is incorrect: The Enforcement Directorate functions under the Department of Revenue (Ministry of Finance). Statement 3 is correct: Under the PMLA, the ED has the authority to provisionally attach properties that are deemed to be proceeds of crime, pending further investigation and adjudication. |
The ED's main function is to enforce economic laws, primarily the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA), to combat financial crimes like money laundering.
The ED operates under the Department of Revenue, which is part of the Ministry of Finance.
Money laundering is the illegal process of disguising the origins of illegally obtained money (e.g., from corruption or drug dealing) to make it appear as if it came from a legitimate source.
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