FUGITIVE ECONOMIC OFFENDERS ACT,2018

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Picture Courtesy: Live mint

Context:

During the winter session, Union minister has responded to an unstarred question regarding Fugitive Economic Offenders (FEOs).

 Who are Fugitive Economic Offenders?

A Fugitive Economic Offender is a person against whom a court has issued an arrest warrant for a scheduled economic offence of ₹100 crore or more, and who either leaves India to avoid investigation or refuses to return when summoned, ensuring the law targets major financial escapees rather than minor offenders.

 What are the key provisions of the Fugitive Economic Offender Act, 2018?

• The Act establishes a structured mechanism to identify fugitive offenders and enable confiscation of their assets.
• It applies to scheduled economic offences involving ₹100 crore or moreand authorises the Enforcement Directorate (ED) to petition a Special Court for declaring a person as an FEO.
• The ED may provisionally attach the accused’s properties for up to 180 daysto prevent their disposal or transfer.
• Once the Special Court under Prevention of Money Laundering Actdeclares an individual a fugitive economic offender, all properties—within India or abroad (or equivalent value)—can be confiscated, and the offender is barred from filing or defending civil claims in India unless they return.
• All confiscated properties vest with the Central Government, free from any liabilities or encumbrances.

 Importance of the Fugitive Economic Offenders Act, 2018:

• Ensures action against high-value absconders:The Act empowers India to proceed against offenders like Vijay Mallya or Nirav Modi, who flee abroad to evade financial crime prosecution.
•  Deters flight behaviour:Knowing that properties can be seized even in their absence discourages economic offenders from fleeing the country.
•  Facilitates confiscation of global assets:It allows confiscation of both domestic and overseas assets (or equivalent value), strengthening recovery of public money—important in cases involving bank frauds.
•  Improves bank recovery and reduces NPAs:Using provisions of the Act, ED seized assets worth over ₹18,000 crore linked to the Vijay Mallya, Nirav Modi and Mehul Choksi cases, out of which ₹9,041 crore was returned to banks, helping reduce NPA burdens.

 Strengthens India’s global credibility:By acting against large scamsters, India signals strong intent against corruption and boosts investor confidence and financial integrity scores. International pressure created through confiscation orders contributed to UK courts acknowledging India’s seriousness during Vijay Mallya’s extradition trial.

•  Supports extradition processes:Property confiscation creates pressure on offenders in foreign jurisdictions and strengthens India’s negotiating position during extradition hearings.

 What are the challenges of Fugitive Economic Offenders?

• Slow extradition processes due to foreign legal systems:The Nirav Modi case has been pending despite India securing extradition approval in 2022, because of appeals in UK courts — showing delay beyond India’s control.
•  Difficulty tracing overseas assets:Mehul Choksi, hiding in Antigua, leveraged citizenship loopholes and offshore shell structures, delaying action despite India issuing Red Notices and invoking MLAT frameworks.
•  Legal hurdle to prove deliberate fleeing:Fugitives often claim medical or political grounds — Vijay Mallya argued “inability to travel” before UK courts, prolonging recognition of his fugitive status.
• Concerns over misuse:Industry bodies warn that aggressive application without safeguards may discourage genuine business risk-taking; ASSOCHAM and CII have called for caution in treating business failure as criminal intent.
•  Weak inter-agency coordination:In the Sandesara (Sterling Biotech) case, ED, CBI, MEA and banks operated separately, delaying overseas asset seizure despite ED investigations since 2017.

 What are the ways to deal with challenges?

• Strengthen global cooperation:Countries like the UK improved extradition cooperation after India pursued cases through FATF compliance diplomacy, this strategy can expand to EU and Caribbean jurisdictions.
•  Faster extradition mechanisms:Setting up dedicated financial crime litigation wings at Indian missions in London, Dubai, Singapore may reduce court delays.
•  Joint task forces for asset tracing:Successful repatriation of ₹9,041 crore in the Mallya–Modi–Choksi cluster shows the value of coordinated action between banks, ED and courts.
•  Technology-based asset intelligence:Countries like UAE use AI-based financial tracing and blockchain for forensic audits.  India’s Financial Intelligence Unit and Enforcement Directorate can adopt similar systems for cross-border asset recovery.

Conclusion:

The Fugitive Economic Offenders Act, 2018 strengthens India’s ability to pursue high-value economic fugitives by enabling swift asset seizure and improving recovery of public money. While landmark cases like Vijay Mallya and Nirav Modi demonstrate its deterrent and enforcement potential, persistent challenges such as slow extradition processes, difficulty tracing overseas assets, and coordination gaps limit its full impact. With better global cooperation, stronger institutional capacity, and procedural safeguards, the Act can evolve into a powerful tool for restoring financial accountability and reinforcing trust in India’s governance and financial systems.

Source: Live mint