Establishment of ED and its offices

Established in the year 1956 under the Department of Revenue, Ministry of Finance, Government of India, the Enforcement Directorate’s (“ED”) primary role is to enforce particularly the Prevention of Money Laundering Act, 2002 (PMLA).

The Enforcement Directorate (ED) has five regional offices -– Delhi, Mumbai, Chennai, Chandigarh and Kolkata.  But today, ED has an office in each state and city in India and is headquartered as Joint Director (Admin). Directorate of Enforcement. Pravartan Bhawan, APJ Abdul Kalam Road. New Delhi – 110 011.

Money Laundering  

Prevention of Money Laundering Act – 2002 stipulates that any act or action involving money obtained from crime proceeds into a legitimate service.   Such a use may be of any kind – purchasing property, assets, investments, or any expense incurred by the Accused.

It is an expansive definition and therefore confers enormous powers on the Enforcement Directorate to investigate, seize, raid, and attach properties that may be obtained through crime proceeds.

Section 3 of PMLA describes the offence of Money Laundering.  It states that whosoever directly or indirectly attempts to indulge or knowingly assists or is a party or is involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of money laundering.

Process followed by Enforcement Directorate (ED)

After money laundering information, the ED uses Section 16 (the power of survey) and Section 17 (search and seizure) of the PMLA to examine the property and investigate and seize money and documents.

ED generates a complaint document called ECIR – Enforcement Case Information Report (ECIR), which is equivalent to First Information Report (FIR) generated when a criminal case is lodged at a Police Station. Unlike a police FIR, the Supreme Court of India has held that the ED doesn’t need to provide a copy of the ECIR to an accused or a suspect.

The ED determines whether an arrest is necessary for accordance with Section 19 based on such (power of arrest). The ED is also permitted to conduct a search and seizure directly under Section 50 of the PMLA without contacting the accused for questioning. ED is not required to call the accused before making a search, seizure, or arrest.

Powers of Enforcement Director

In a recent judgement by the Supreme Court of India, Vijay Madanlal Choudhary (2003), the Honorable Court gave unfettered, blank-wide powers to Enforcement Directorate to investigate the offences under the Prevention of Money Laundering Act (PMLA).  The Supreme Court laid down the following:

• Confession in Custody: Whereas principles of natural justice and. Criminal Procedure Code states that any confession made in police custody is not admissible in a court of law. However, in case of investigation or admission made by the accused in the control of the Enforcement Directorate will be acceptable and can be used against the accused.
• Copy of Complaint: While basic jurisprudence calls for the accused to be given a copy of the Complaint, it is not necessary in the enforcement directorate’s investigation of the PMLA cases. It means the Accused will be fighting in Court without knowing the exact charges against them.           

When Enforcement Directorate initiates an Enforcement Case Information Report, a copy doesn’t need to be supplied to the Accused. Only the Accused is supposed to answer the questions without knowing the main complaint in the case they are being summoned.

• Attachment of property: Any property seized by the Enforcement Directorate for an offence under the Prevention of Money Laundering (PMLA) will be presumed to be from the “proceeds of crime”.  It is upto the Accused to show that it is not from the proceeds of the crime. Instead, the burden of proof now shifts towards the Accused, meaning they will have to go through the trial (which may last for years and decades) to get the property back the Enforcement Directorate seized.

The process is to be followed by the Accused.

After receiving a summon from the Enforcement Directorate, the first thing that needs to be determined is the nature of the offence that is being investigated. Usually, the summons that is received will not reveal if you are being called as a witness or are being called as a witness. 

There are no guarantees that they will not be arrested when the accused appears before the Enforcement Directorate.  However, the fact that you are only given a summons, and the Directorate did not come and stop you directly, means that they want to know about your role or seek your help in investigations.  Therefore, do not panic when you have a summons from the Enforcement Directorate.

Consulting a Lawyer:

Lawyers are prohibited from appearing before Enforcement Directorate at their offices. However, engaging lawyers leads to several advantages for the accused:

• Lawyers will provide you with chances of your being arrested or if you are only being summoned as a witness to assist in the investigations.
• They will advise you on seeking bail if required.
• They will advise you to make a correct statement before the officials so that you are cooperating with the Investigation. This step is essential as it reduces the cycle of meetings and appearances before the investigation authorities.
• It will make the accused understand their rights and obligations during an investigation and how best to satisfy the Investigation Officer with evidence and studies.

In many cases, the department of ED would allow lawyers to appear, submit papers and even answers the question. However, special permission would be required to do so.  This may mainly happen if the accused are outside India or have medical emergencies for themselves or close relations to show to the authorities.

Contact and take an appointment with Senior Partner Dinesh Jotwani (Cell: +919730049704) or email at dinesh@jotwani.com