An Enforcement Directorate do investigates, enforces economic laws & regulations, financial crimes such as money laundering.

What does an Enforcement Directorate do?

Introduction  –

An Enforcement Directorate do investigates and enforces economic laws and regulations, focusing on financial crimes such as money laundering. For the last two decades, we often hear the names of these two institutions in the political corridors, ED and CBI. Just as a common man gets scared after seeing the police in uniform, we get to see this fear among the powerful businessmen and political people of India as soon as we hear the name of ED. We have seen what the shadow economy is through the last few articles.

It has been seen that this shadow economy is much bigger than the economy of India. Which means that so much black money goes in practice in the Indian market, which causes loss to the country. Influential people do many of these practices illegally to save the tax of the government. ED has been established for this. Enforcement Directorate It works under the Ministry of Finance but it has been given a lot of power.

Institutions like ED, CBI and NCB are misused by the central government, it is the allegation of regional, state parties which is done from time to time. The Court has also commented on this many times, which is never without fact, so it should be taken seriously.

There is a problem of the politics of India that whichever party is not in power, it alleges that these institutions are misused, but when this party is in power, it answers its independence, so about the ED in a real way. Analyzing is very important.

What is Enforcement Directorate –

It is a statutory / statutory body which was established in 1956 and in its early days it worked under the Reserve Bank of India. At that time it was not as important as it is today. Foreign exchange and black money is its main function, on which it is its job to control. The work of ED is for the economic security of the country and action against powerful people, so it has been given a lot of power.

It is its function to control and punish whatever illegal activities happen in economic matters, in which it mainly works for two important laws. In this mainly IPS, IRS and IAS officers are taken and the organization trains some officers differently and on the basis of promotion many officers are taken in the organization.

  • Foreign Exchange Management Act 1999 ( FEMA)
  • Money Laundering Act 2000 (PMLA)

This institution has been given the right to investigate and confiscate property in economic matters for violation of the prohibited rules of these two laws. Its main objective is to eliminate corruption in the country and to protect foreign exchange in India in the interest of the country.

History of Enforcement Directorate –

In 1956, the Enforcement Unit was set up which functioned under the Reserve Bank. The FERA Act, which worked under the Foreign Exchange Regulation Act 1947. This was the situation before the foreign exchange and liberal economy developed. In which like today, the black money earned in India was made for the people who are white. Its first director was made chairman Sanjay Kumar Mishra, who was the first commissioner of income tax.

After the liberalization of India’s economy after 1990, many laws were changed which is relates to international law. The main two laws of India, FEMA and PMLA, this important task of controlling the activities under this law is done by the Enforcement Directorate, after 2000, it was given a lot of power and

ED has been given parallel judicial powers to this institution, which exercises its rights in collaboration with other institutions. As of today, its control is done directly through the Prime Minister’s Office. Spectrum scam, Nirav Modi case, Vijay Mallya case, we get to see many such famous cases through ED. People try to whitewash them by reaching abroad through wrong means like hawala, by means of wrong way to get the money received through the government’s tax.

By exercising strict authority on all these economic matters, this organization works for the interest of the country. That is why it is known in important institutions of India and this institution is very famous for political and high profile cases.

Enforcement Directorate & CBI  –

Both the institutions are the central institutions of the country doing the investigation, but the main difference in this is that the Enforcement Directorate, it has been created to control the illegal activities happening in economic matters. CBI This institution has been formed to investigate the criminal and civil matters on important matters of the country. For example, in the Sushant Rajput case, all three important institutions of the country were looking after the work, in which these institutions are NCB, CBI and Enforcement Directorate.

The scope and purpose of the investigation of CBI are quite different from that of ED and these two entities work together in some important matters. The process of doing the investigation of both is almost the same and the ED has its own forensic lab, which plays a very important role in the investigation. CBI This organization works under the Prime Minister’s Office, ED it is operated from the Revenue Department of the Ministry of Finance.

When powerful or influential people at the local level try to influence a case and the important work of an institution like CBI is on matters of security of the country. ED This organization works on the basis of international law, which was created under the guidance of the United Nations Organization, which was created with the aim of eradicating corruption from the world through globalization. Its main purpose is not to create any obstacle in the economic matters of the world.

FEMA Act & Enforcement Directorate –

FEMA This law has gone to the administration of foreign exchange in India, before this there was no such purpose under the FERA law, but in view of the economic crisis of 1990, many changes were made by the Government of India in the economic objective of the country, in which liberal policy was the most. There was an important decision under which the restriction imposed on foreign investment was removed and India’s market was opened to the world.

The main purpose of regulation of foreign exchange under the FEMA law is to control black money and to take action by an organization like ED on the violation of FEMA law. India’s economy should have developed after 1990, that has not happened, the main reason for this is because of black money and hawala, through which India’s money is sent abroad by whitewashing it in India, due to which it will affect the country’s currency. There is effect.

Black money and hawala is the work to be done against the country, for this an organization like ED has been created keeping in view the model of international law, so that corruption in the country can be ended. For this, the work of an organization like ED is very important, which has proved to be effective till date, it is a matter of amendment. Because ED is accused by many people that this institution is used by the central government only for political purposes, which does not fulfill its main purpose.

Black Money Ban Act and ED / PMLA & ED –

This law was enacted in 2002, which came into force in 2005, to look into such cases of wealth acquired by creating black money. In cases where the assets were acquired through black money, the ED has been given the power to confiscate the property and charge three times the penalty.

The main purpose of this law is to end corruption and the people who commit corruption should be punished severely, so some of its provisions should be made very strict. Section 45 was struck down by the Supreme Court, which was inconsistent with the fundamental rights of citizens. Such allegations are mainly made by the ED through such laws under political influence.

Through this law, it has been the main objective of the United Nations to fix the law system of India due to liberal policy, the model law made under it has been used for the law made in India. Corruption has been our biggest problem and it causes loss of several thousand crores every year to the revenue department of the country.

Features of Enforcement Directorate (ED) –

  • The administrative control of the ED is exercised by the Department of Revenue, Ministry of Finance.
  • The main function of the ED is to see whether the provisions of FEMA 1999 and PMLA Act 2002 are being followed.
  • After the Liberal Policy came in India, the FEMA Act was repealed by the repeal of the FEMA Act, under which it is necessary to recognize the discrepancy in the transactions and payments in the country and prevent the loss of revenue to the country.
  • In order to prevent the black money of the United Nations, a model law was given to the member countries of the whole world, under which FEMA law was made and the work of ED was rescheduled.
  • This main task was given to the ED to secure the foreign exchange coming into India and to prevent the loss caused by black money to the country.
  • ED is the country’s largest investigative organization in economic matters, so its forensic lab has been created independently so that there is no hindrance in the investigation.
  • This organization, which started from the Enforcement Unit in 1956, was later made the Enforcement
  • Directorate and changed from being under the Reserve Bank to the Ministry of Finance.
  • The head office of the ED has been made in Delhi, where the head of the ED sits and five major departments have been created all over the country.
  • Mumbai, Chennai, Chandigarh, Kolkata and Delhi These five departments have been created, which are run by special directors.
  • The Regional Office/Zonal ED Offices are managed by the Joint Director.
  • The Sub Regional Office is headed by a Deputy Director.

Function of Enforcement Directorate (ED) –

  • The main function of ED is to take action under this law for violation of FEMA Act 1999 and charge three times the penal amount in case of winning amount.
  • Prevention of Money Laundering Act 2002 (PMLA) To deal with offenses under this Act.
  • To confiscate related property under PMLA Act and to prosecute criminal cases through tribunals.
  • To give notice under this law on the cases of contravention of old law FERA 1973 till 31st May 2005 and prosecute in the concerned court.
  • Under Fugitive Economic Offenders Act 2018, to file a case in economic matters, to do an  investigation and to complete such cases under international law.
  • Combining the cases of Smuggling Act 1974 under the law relating to FEMA 1999 to prosecute through both laws.
  • International agreements are important for establishing legal relations with foreign countries to confiscate property abroad in cases of black money.
  • In many cases, there are cases related to economic, crimel and drugs, in which the work of investigation has to be done in collaboration with agencies like CBI and NCB.

What are the Statute works for Enforcement Directorate in India?

The Enforcement Directorate (ED) in India primarily operates under the following statutes:

  1. Prevention of Money Laundering Act, 2002 (PMLA):
    • The PMLA aims to prevent money laundering and provide for confiscation of property derived from proceeds of crime.
    • ED investigates offenses under this act, conducts inquiries, and attaches/ confiscates properties acquired through illegal means.
  2. Foreign Exchange Management Act, 1999 (FEMA):
    • FEMA regulates foreign exchange transactions and outward remittances to safeguard India’s foreign exchange reserves.
    • ED investigates violations related to foreign exchange transactions, including forex trading, remittances, and overseas investments.
  3. Customs Act, 1962:
    • The Customs Act governs the import and export of goods to and from India.
    • ED investigates cases of customs duty evasion, smuggling, and related financial offenses.
  4. Income Tax Act, 1961:
    • The Income Tax Act regulates taxation in India, including income tax, corporate tax, and capital gains tax.
    • ED collaborates with the Income Tax Department to probe cases involving tax evasion, money laundering, and undisclosed income.
  5. Provision of Criminal Procedure Code (CrPC):
    • ED uses provisions of the CrPC, such as search and seizure, arrest, and investigation procedures, to enforce various statutes.
  6. Other Relevant Laws:
    • Additionally, ED may utilize provisions of other laws like the Companies Act, 2013, and the Benami Transactions (Prohibition) Act, 1988, to investigate financial irregularities and economic offenses.

Overall, the Enforcement Directorate plays a crucial role in combating financial crimes and enforcing compliance with economic laws in India.

Conclusion –

In this way we have seen how ED works and how it is structured. Many high profile cases of the country have been seen by the ED till date, in which the local law and order are generally affected a lot from a political point of view in such cases. Therefore, in such cases, it is very difficult to get these cases processed by the Local Investigation Agency most of the time, so an institution like ED has been created by the central government.

ED is a Statutory Authority, which performs its duty on the violation of two important laws, in which FEMA is the law related to foreign exchange and the second important law is the PMLA law which deals with the cases of violations in cases of black money. In this, mainly central cadre officers are appointed, in which IAS officers, IPS officers and most importantly IRS officers who have a lot of experience in tax and revenue matters, such officers are appointed.

A lot of appointments are also done under the ED, due to which this institution has been given a lot of power by the central government, which takes action on very powerful and influential people of the country. Therefore, many times this institution is being accused of being misused by the central government. In the cases that come in the ED, in very few cases, the decision process goes on till the end, meaning action is taken on the basis of evidence, such allegations are there. Most of the cases are done with political influence, it is the allegation of many political parties.

The main purpose of creating ED is to control black money and to provide security to the foreign exchange coming into India so that the Finance Ministry can get good revenue which is good for the country’s interest.


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