On ED’s power to arrest and seek custody

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In a major setback to Tamil Nadu Minister V. Senthilbalaji, the Madras High Court on July 14 upheld the legality of his arrest by the Enforcement Directorate (ED) and his subsequent remand in judicial custody in a money-laundering case linked to a cash-for-jobs scam. Justice C.V. Karthikeyan, in his order as the third judge after a two-member Bench gave a split verdict, ruled that the ED can subject any person accused in a case booked under the Prevention of Money Laundering Act (PMLA), 2002, to custodial interrogation and that the Minister can be taken into custody even after the expiry of 15 days from his arrest. Mr. Balaji and his wife have since then moved the Supreme Court to challenge the HC verdict upholding his arrest.

Enforcement Directorate (ED)

The Enforcement Directorate (ED) is a law enforcement agency under the Department of Revenue, Ministry of Finance, in the Government of India. It is responsible for enforcing economic laws and fighting economic crime in India.

The ED was established in 1956 as the Enforcement Unit under the Department of Economic Affairs. It was renamed the Enforcement Directorate in 1957. The ED’s mandate was expanded in 1973 with the enactment of the Foreign Exchange Management Act (FEMA). The ED’s powers were further enhanced in 2002 with the enactment of the Prevention of Money Laundering Act (PMLA).

The ED’s main functions are to:

• Investigate offences under FEMA and PMLA.
• Prevent the generation of black money.
• Apprehend and prosecute offenders
• Attach and confiscate properties of offenders.
• Undertake preventive measures to combat economic crime.

The ED has a wide range of powers, including the power to search and seize property, the power to interrogate suspects, and the power to issue warrants of arrest. The ED also has the power to freeze bank accounts and to attach properties.

The ED has been involved in a number of high-profile cases, including the investigation of the 2G spectrum scam, the coal block allocation scam, and the Nirav Modi case. The ED has also been involved in the investigation of hawala transactions and money laundering cases.

The ED is a powerful law enforcement agency that plays an important role in combating economic crime in India. The ED’s work has helped to recover billions of rupees in black money and to bring to justice a number of high-profile offenders.

Here are some of the key laws that the ED enforces:

• Foreign Exchange Management Act, 1999 (FEMA)
• Prevention of Money Laundering Act, 2002 (PMLA)
• Fugitive Economic Offenders Act, 2018 (FEOA)
• Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)
• Indian Penal Code, 1860 (IPC)

The ED has its headquarters in New Delhi and has offices in all major cities in India. The ED also has a number of overseas offices, including in the United States, the United Kingdom, and Switzerland.

The ED is a highly respected law enforcement agency. It has a good track record of investigating and prosecuting economic crime. The ED’s work has helped to make India a more transparent and accountable country.

The Prevention of Money Laundering Act (PMLA), 2002

It is an Act of the Parliament of India enacted by the NDA government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005.

The PMLA defines money laundering as “the process of converting or transferring property derived from criminal activity into assets that appear to have a legitimate source.” The Act also defines “proceeds of crime” as “any property derived or obtained directly or indirectly by any person as a result of criminal activity.”

The PMLA prohibits a number of activities related to money laundering, including:

• Concealing or disguising the true nature, source, location, disposition, movement, or ownership of property derived from criminal activity.
• Investing, using, or holding property derived from criminal activity.
• Involving a financial institution in any way in money laundering.

The PMLA also establishes a number of authorities to investigate and prosecute money laundering cases, including the Enforcement Directorate (ED), the Central Bureau of Investigation (CBI), and the Serious Fraud Investigation Office (SFIO).

The PMLA has been amended several times since it was enacted in 2002. The most recent amendment was made in 2019. The amendment includes a number of new provisions, such as the creation of a new offence of “terrorist financing” and the expansion of the definition of “proceeds of crime” to include property derived from terrorist activities.

The PMLA is a comprehensive law that provides a strong framework for combating money laundering in India. The Act has been effective in disrupting the flow of money from criminal activities and in bringing to justice a number of offenders.

Here are some of the key features of the PMLA:

• It defines money laundering and provides for its punishment.
• It establishes a number of authorities to investigate and prosecute money laundering cases.
• It requires financial institutions to collect and report information about suspicious transactions.
• It provides for the confiscation of property derived from money laundering.

The PMLA is an important tool in the fight against money laundering in India. The Act has helped to make India a more transparent and accountable country.