Why in the News?
- In December 2025, the ED attached assets worth ₹61.2 crore of Chaitanya Baghel in connection with the alleged Chhattisgarh liquor scam.
- The scam caused an estimated loss of over ₹3,500 crore to the exchequer, highlighting ED’s role in investigating economic offences and recovering illicit assets.
About the Enforcement Directorate (ED)
- The Enforcement Directorate (ED) is a domestic law enforcement and economic intelligence agency in India.
- It is responsible for enforcing economic laws and investigating economic crimes, including money laundering and foreign exchange violations.
- Nodal Ministry: Department of Revenue, Ministry of Finance.
- Historical Background:
- The ED originated in May 1956 as an “enforcement unit” to handle violations of Foreign Exchange Regulation Act, 1947 (FERA).
- In 1957, it was renamed as the Enforcement Directorate.
Structure of the Enforcement Directorate (ED)
- Headquarters & Leadership: ED is headquartered in New Delhi and is headed by the Director of Enforcement.
- Regional Offices: Five regional offices are located in Mumbai, Chennai, Chandigarh, Kolkata, and Delhi, each led by a Special Director of Enforcement.
- Zonal & Sub-Zonal Offices:
- 10 Zonal Offices, each headed by a Deputy Director.
- 11 Sub-Zonal Offices, each headed by an Assistant Director.
Recruitment and Composition of the Enforcement Directorate (ED)
- Officers are recruited directly or deputed from other agencies.
- Comprises officers from IRS (Income Tax), IPS (Police), IAS (Administrative Services), including Income Tax, Customs, Excise officers, and police personnel.
Tenure and Amendments
- Initially, ED Directors have a fixed tenure of 2 years.
- 2021 Ordinances allowed the tenure to be extended up to 5 years through annual extensions.
- Extensions require recommendations from a High-Level Committee (CVC members for ED; PM, Opposition Leader, and CJI for CBI).
- Supreme Court ruling (July 2023): Upheld the statutory provision for “piecemeal” tenure extensions but invalidated illegal extensions given to outgoing ED Chiefs.
Objectives of the Enforcement Directorate (ED)
The primary objective of the ED is the enforcement of three key economic laws:
- Foreign Exchange Management Act, 1999 (FEMA) – regulating foreign exchange and investigating violations.
- Prevention of Money Laundering Act, 2002 (PMLA) – combating money laundering and confiscating proceeds of crime.
- Fugitive Economic Offenders Act, 2018 (FEOA) – attaching properties of fugitives who evade arrest in India and transferring assets to the government.
Additionally, ED is the sponsoring agency for preventive detention under COFEPOSA (1974) in cases related to FEMA violations and smuggling activities.
Functions of the Enforcement Directorate (ED)
- Investigates economic crimes, money laundering, and foreign exchange violations.
- Enforces FEMA (1999), PMLA (2002), and FEOA (2018).
- Attaches and confiscates assets acquired through illicit activities.
- Summons individuals for testimony and production of records.
- Acts as a deterrent against economic offences through investigation and asset recovery.
- Sponsors preventive detention under COFEPOSA (1974) for smuggling or FEMA violations.
- Tracks illicit fund flows and coordinates with domestic and international agencies.
- Advises the government on policy and regulatory measures to prevent financial crimes.
Legal Framework of Enforcement Directorate (ED)
- Foreign Exchange Management Act (FEMA), 1999
- ED investigates suspected violations of foreign exchange laws.
- It can adjudicate and impose penalties for contraventions.
- Prevention of Money Laundering Act (PMLA), 2002
- Investigates money laundering offences, attaches and confiscates proceeds of crime.
- Fugitive Economic Offenders Act (FEOA), 2018
- Mandates attachment and confiscation of properties of fugitives who evade Indian law.
- COFEPOSA, 1974
- ED sponsors preventive detention in cases of smuggling or foreign exchange violations.
Prevention of Money Laundering Act (PMLA), 2002
- Enacted in January 2003, the PMLA seeks to:
- Prevent and control money laundering in India.
- Confiscate and seize property obtained from laundered money.
- Address other issues connected to money laundering activities.
- Section 3 defines money laundering as knowingly assisting, being involved in, or projecting proceeds of crime as untainted property.
- The Act has been amended several times:
- 2009 and 2012 Amendments
- Finance Acts 2015, 2018, and 2019
- Powers of Enforcement Directorate (ED) under PMLA:
- Sections 48 & 49: Empower ED officers to investigate money laundering cases.
- Section 50(2): Summon any person for evidence or production of records.
- Section 50(3): Mandates attendance and truthful disclosure by summoned individuals.
- Property Confiscation: Special powers to attach and seize proceeds of crime.
- Supreme Court Rulings: In 2022, SC upheld ED’s powers under PMLA, emphasizing adherence to rule of law while clarifying that ED officials are not equivalent to police officers and cannot make arrests under PMLA.
Q. With reference to the Enforcement Directorate (ED), consider the following statements:
1. ED can attach and confiscate properties obtained from proceeds of crime under FEOA and PMLA.
2. ED is empowered to sponsor preventive detention under COFEPOSA (1974).
3. Supreme Court has held that ED officials are equivalent to police officers for making arrests under PMLA.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer: (a) 1 and 2 only
Explanation:
Statement 1 is correct: ED can attach and confiscate assets under PMLA and FEOA.
Statement 2 is correct: ED sponsors preventive detention under COFEPOSA (1974) for smuggling or FEMA violations.
Statement 3 is incorrect: Supreme Court clarified that ED officials are not police officers and cannot make arrests under PMLA.
