From UPSC perspective, the following things are important :
Prelims level : Particulars of PMLA , ED.
Mains level : Corruption and transparency
- At least 17 Opposition parties have dubbed as “dangerous” the recent Supreme Court judgement upholding amendments made in 2019 to the Prevention of Money Laundering Act (PMLA), giving more powers to agencies such as the Enforcement Directorate (ED).
What are the concerns for this verdict?
- Violate fundamental rights: Petitions were filed against the amendments, which the challengers claimed would violate personal liberty, procedures of law and the constitutional mandate.
- Complex process: The petitioners included many veteran politicians who all claimed that the “process itself was the punishment”.
- Coercion of ED: There were submissions that the accused’s right against self-incrimination suffered when the ED summoned them and made them sign statements on threats of arrest.
What is PMLA?
- Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted by the government to prevent money-laundering and to provide for confiscation of property derived from money-laundering.
What is money laundering?
- Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source.
What is ED?
- The Directorate of Enforcement is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government Of India.
What acts it covers?
- Prevention of Money Laundering Act (PMLA)
- Fugitive Economic Offenders Act
- Foreign Exchange Management Act
- Foreign Exchange Regulation Act (FERA)
Roles and functions of the ED
- Summon, Search and seizure: The ED carries out search (property) and seizure (money/documents) after it has decided that the money has been laundered, under Section 16 (power of survey) and Section 17 (search and seizure) of the PMLA.
- Arrest and detentions: On the basis of that, the authorities will decide if an arrest is needed as per Section 19 (power of arrest).
- Attachment of property: Under Section 50, the 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.
- Filing of chargesheet: 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.
Why ED is making news?
- Selective witch-hunt: The ED has often been attacked for initiating investigations, raiding and questioning leaders of opposition parties, be it under the current regime or under past governments.
Why ED is on target?
- Huge discretions: The ED is the only Central agency in the country that does not require permission from the government to summon or prosecute politicians or government functionaries for committing economic offences like money laundering.
- Used for petty crimes: PMLA is pulled into the investigation of even “ordinary” crimes and assets of genuine victims have been attached.
- Actual purpose denigrated: PMLA was a comprehensive penal statute to counter the threat of money laundering, specifically stemming from the trade in narcotics.
- Violations of Rights: PMLA was enacted in response to India’s global commitment to combat the menace of money laundering. Instead, rights have been “cribbed, cabined and confined”.
Issues with PMLA
- Misuse of central agencies: PMLA is being pulled into the investigation of even ordinary crimes by the Enforcement Directorate.
- Seizing of assets: Assets of genuine victims have been attached. The ED could just walk into anybody’s house.
- Politically motivated raids: In all this, the fundamental purpose of PMLA to investigate the conversion of “illegitimate money into legitimate money” was lost.
- Opacity of charges: Petitioners pointed out that even the Enforcement Case Information Report (ECIR) – an equivalent of the FIR – is considered an “internal document” and not given to the accused.
- Vagueness over evidence: The accused is called upon to make statements that are treated as admissible in evidence.
- Harassment: The ED begins to summon accused persons and seeks details of all their financial transactions and of their family members.
- Against individual liberty: The initiation of an investigation by the ED has consequences that have the potential of curtailing the liberty of an individual.
- It is unlikely that corruption can be substantially reduced without modifying the way government agencies operate.
- The fight against corruption is intimately linked with the reform of the investigations.
- Therefore the adjudicating authorities must work in cooperation and ensure the highest standards of transparency and fairness.
Q. The trust in premier investigating institutions, and their credibility, is at stake. Is the ED a tool to investigate financial skulduggery or a stick to browbeat opposition leaders? Critically examine.