Enforcement Directorate – Background

• Role: The Enforcement Directorate is a multi-disciplinary organization mandated with the investigation of money laundering and violations of foreign exchange laws.
• Fighting Economic Crime: It is a domestic and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
• Parent Ministry: It is part of the Department of Revenue, Ministry of Finance, Government Of India.
• Money Laundering: Its primary objective is to curb the generation and circulation of black money, ensure compliance with the laws concerning foreign exchange, and prevent money laundering.

Enforcement Directorate – Evolution

• Origin: On 1st May 1956, when an ‘Enforcement Unit’ was formed in the Department of Economic Affairs 
  • Initial Scope: It was entrusted with handling Exchange Control law violations under the Foreign Exchange Regulation Act, 1947 (FERA ’47). 
• Renaming to Enforcement Directorate: In the year 1957, this Unit was renamed as ‘Enforcement Directorate’.. 
• Statutory Power to Enforcement Directorate (ED):
  • Through Foreign Exchange Management Act, 1999 (FEMA) came into operation w.e.f. 1st June 2000. 
  • Through Prevention of Money Laundering Act, 2002 (PMLA) was enacted and ED was entrusted with its enforcement w.e.f. 1st July 2005.
  • Through Fugitive Economic Offenders Act: ED is entrusted with its enforcement with effect from 21st April 2018.

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• Appointment Structure: 
  • CVC Act 2003: The Enforcement Directorate Director is appointed as per provisions of the Central Vigilance Commission Act, 2003
  • Role of Central Government: The Centre appoints the director on the recommendation of a committee, with the Central Vigilance Commissioner as chairperson.
  • Committee Members: Other committee members are secretaries in the Finance (Revenue), Home and Personnel and Training ministries
  • Security of Tenure: The tenure should be “not less than two years,” and any transfer has to be sanctioned by the appointing committee

Statutory Functions of the Enforcement Directorate

Administrative Structure of Enforcement Directorate

• Headquarters: New Delhi, is headed by the director of enforcement. 
  • Five Regional Offices: Mumbai, Chennai, Chandigarh, Kolkata, and Delhi headed by special directors of enforcement.
  • Zonal Offices: Zonal offices of the directorate are at Pune, Bengaluru, Chandigarh, Chennai, Kochi, Delhi, Panaji, Guwahati, Hyderabad, Jaipur, Jalandhar, Kolkata, Lucknow, Mumbai, Patna, and Srinagar
• Parent Body: It is part of the Department of Revenue, Ministry of Finance,
• Head of Organisation: Director, who oversees the functioning of the entire organization.

Difference between the Central Bureau of Investigation and the Enforcement Directorate 

Issues in the Functioning of the Enforcement Directorate: 

• Lack of Resources: The Enforcement Directorate has a limited budget which limits its capability to investigate and prosecute economic offenses.
• Lack of Cooperation: The ED often faces difficulty in getting cooperation from other law enforcement agencies, such as the State Police and the Central Bureau of Investigation (CBI). 
  • Foreign Jurisdictions: The ED often faces challenges in obtaining cooperation from foreign jurisdictions in its investigations. 
• Complexity: Economic offenses are often complex and time-consuming to investigate which makes it difficult to secure convictions.
• Political Interference: The ED has been accused of political interference at times which can make it difficult to operate independently and impartially.
• International Data Sharing: Many countries have stringent privacy laws that make it difficult for the ED to get information about bank accounts and other financial transactions.

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Suggestions/ Improvements:

• Ensure Functional Autonomy: There is a need to provide Functional independence to ED and also the protection of ED officers from political interference
• Provide Statutory Backing: Ensuring statutory status by means of adequate legislation will maintain the independence of the Enforcement Directorate.
• Infrastructural Upgradation: Increasing investments in infrastructural upgradations.
• Financial Resources: Increased financial resources and funding so that institutions can function freely without government intervention. 
• Streamlining Information Sharing: There is a need for better coordination with other law enforcement agencies.