Enforcement Directorate

Context: The Supreme Court struck down the Union government’s decision to grant two extensions of tenure to the Chief of Enforcement Directorate (ED).

About the Enforcement Directorate (ED)

About	The Enforcement Directorate (ED) is a specialized law enforcement agency in India. It functions under the Department of Revenue, Ministry of Finance, and is responsible for enforcing economic laws and fighting financial crimes in the country.
Establishment	It was established in May 1956 with the formation of an ‘Enforcement Unit’ under the aegis of the Department of Economic Affairs and handles Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 (FERA 1947). A year later, the Enforcement Unit was renamed Enforcement Directorate. In 1960, the administrative powers were transferred from the Department of Economic Affairs to the Department of Revenue.
Responsibility	ED is a multi-disciplinary organization, and its statutory functions include enforcement of following Acts: The Prevention of Money Laundering Act, 2002 (PMLA). The Foreign Exchange Management Act, 1999 (FEMA). The Fugitive Economic Offenders Act, 2018 (FEOA). The Foreign Exchange Regulation Act, 1973 (FERA). Sponsoring agency under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA).
Jurisdiction	Both FEMA or PMLA apply to the whole of India. So, the ED can take action against any person on which this act applies. Cases under FEMA may lie in civil courts where PMLA cases will lie in criminal courts. The agency has jurisdiction over a person or any other legal entity who commits a crime. All the public servants come under the jurisdiction of the agency if they are involved in any offence related to money laundering. ED cannot take an action Suo motu. One has to complain to any other agency or Police first and then ED will investigate the matter and will identify the accused.
Hierarchy	The ED, with its headquarters at New Delhi, is headed by the Director of Enforcement. There are five regional offices at Mumbai, Chennai, Chandigarh, Kolkata and Delhi headed by Special Directors of Enforcement. The Directorate has 10 Zonal offices each of which is headed by a Deputy Director and 11 sub–Zonal Offices each of which is headed by an Assistant Director.
Recruitment	Recruitment of the officers is done directly and by drawing officers from other investigation agencies. It comprises officers of IRS (Indian Revenue Services), IPS (Indian Police Services) and IAS (Indian Administrative Services) such as Income Tax officer, Excise officer, Customs officer, and police.
Tenure	In November 2021, the President of India promulgated two ordinances allowing the Centre to extend the tenures of the directors of the Central Bureau of Investigation (CBI) and the Enforcement Directorate from two years to up to five years. The Delhi Special Police Establishment (DSPE) Act, 1946 (for ED) and the Central Vigilance Commission (CVC) Act, 2003 (for CV Commissioners) have been amended to give the government the power to keep the two chiefs in their posts for one year after they have completed their two-year terms. The chiefs of the Central agencies currently have a fixed two-year tenure, but can now be given three annual extensions. However, no further extension can be granted after the completion of a period of five years in total including the period mentioned in the initial appointment.

Various Concerns Surrounding ED

Politicization and Targeting of Opponents: There have been allegations that the ED has selectively pursued cases against politicians belonging to opposition parties, raising questions about its impartiality and independence.
Misuse of PMLA for Ordinary Crimes: There are allegations that the PMLA is being misused to investigate cases that are unrelated to money laundering or serious organized crime.
Overbroad Powers of ED: The ED’s powers under the PMLA, particularly in terms of search, seizure, investigation, and attachment of assets, have been criticized as being too broad and unchecked.
Overreach and Powers akin to Policing: Some critics argue that the ED has assumed powers akin to that of a policing agency, leading to a blurring of lines between its investigative role and that of law enforcement agencies like the police.
Lack of Transparency and Clarity: The Enforcement Case Information Report (ECIR), which is equivalent to the First Information Report (FIR) in regular criminal cases, is not provided to the accused. This lack of transparency raises concerns about due process and the accused’s ability to defend themselves effectively.
Low Conviction Rate: Despite thousands of cases being registered and arrests made by the ED, the conviction rate under the PMLA remains very low.
- According to the data quoted by the government in Parliament of India, there were zero convictions between 2005 and 2013-14.
- By 2014-15 to 2021-22, out of 888 cases under ED, only 23 cases were under conviction.
Pre-trial Arrests and Due Process: The ED has been criticized for its emphasis on effecting pre-trial arrests rather than focusing on recovering the proceeds of crime.
Limited Clarity on Proceeds of Crime Recovery: There are questions about the effectiveness of the ED in recovering the proceeds of crime and redistributing them to victims.

Way Forward

Oversight Mechanism: Establish an independent oversight mechanism to scrutinize the operations and decisions of the ED, ensuring that investigations are conducted impartially and in compliance with constitutional principles and human rights standards.
Balance between Investigation and Due Process: Emphasize a fair balance between the investigative powers of the ED and the rights of the accused. Ensuring due process and the right to a fair trial should be prioritized while conducting investigations.
Enhancing Conviction Rate: investigations can enhance the effectiveness of the ED in countering money laundering and related offenses.
Increased Coordination: Foster better coordination between law enforcement agencies, such as the Central Bureau of Investigation (CBI) and state police, to ensure efficient handling of cases and avoid duplication of efforts.