The functioning of the Enforcement Directorate

Contents

• 1
• 2 What is the News?
• 3 What is the Enforcement Directorate(ED)?
• 4 How did the ED get powers under the Prevention of Money Laundering Act (PMLA)? 
• 5 When does the ED step in when a crime is committed? 
• 6 Powers of ED under PMLA Act
• 7 Can ED investigate cases of money laundering retrospectively?

What is the News?

The Enforcement Directorate(ED) has been in the news for summoning people for possible money laundering cases.

What is the Enforcement Directorate(ED)?

Read here about ED

How did the ED get powers under the Prevention of Money Laundering Act (PMLA)? 

The PMLA Act was brought in to prevent the parking of money outside India and to trace out the layering and the trail of money.  The ED got its power to investigate these crimes under Sections 48 and 49 of the PMLA Act.

When does the ED step in when a crime is committed? 

Whenever any offence is registered by a local police station, which has generated proceeds of crime over and above ₹1 crore, the investigating police officer forwards the details to the ED.

Powers of ED under PMLA Act

– The ED carries out search (property) and seizure (money/documents) after it has decided that the money has been laundered. On the basis of that, the authorities will decide if the arrest is needed or not.

– ED can also directly carry out search and seizure without calling the person for questioning. It is not necessary to summon the person first and then start with the search and seizure. 

– If the person is arrested, the ED gets 60 days to file the prosecution complaint (chargesheet) as the punishment under PMLA doesn’t go beyond seven years.

– If no one is arrested and only the property is attached, then the prosecution complaint along with the attachment order is to be submitted before the adjudicating authority within 60 days.

Can ED investigate cases of money laundering retrospectively?

If an ill-gotten property is acquired before the year 2005 (when the PMLA law was brought in) and disposed off, then there is no case under PMLA. 

But if proceeds of the crime were possessed before 2005, kept in cold storage and used after 2005 by buying properties, the colour of the money is still black then the person is liable to be prosecuted under PMLA. 

Source: This post is based on the article “The functioning of the Enforcement Directorate” published in The Hindu on 18th April 2022.