How does the Process for Complaints to Enforcement Directorate Work?

Monisha Chaudhary

10 Sep, 2022

To understand what types of Complaints are handled by the ED in India, it is important to understand the Jurisdiction of the Enforcement Directorate. Primarily responsible for handling the two laws in India, the Foreign Exchange Management Act (FEMA), 1999 and the Prevention of Money Laundering Act (PML), 2005. These two laws apply to the whole of India, including the state of Jammu and Kashmir.

The power of the Enforcement Directorate is to take action under any or both of the above laws. On the other hand, Civil Court handles FEMA cases while PMLA cases are heard in Criminal Courts.

The status of the individual suspected of any crime under the above two Acts and laws governing the same, be it a politician or a businessman, does not hamper the working of the ED as it works impartially against any person or legal entity who commits a crime. In case any public employee is involved in any money laundering offence, they will be subject to the agency’s jurisdiction.

Types of Complaints to Enforcement Directorate

The crime relating to the economic nature falls under either FEMA^[1] or PMLA or both, then it shall be handled by the Enforcement Directorate. 

FEMA Related Offences

The designated officials of the Enforcement Directorate shall involve in the investigation and adjudication of the offences under the Foreign Exchange Management Act as well as Foreign Exchange Regulation Act, 1947. The FEMA violations shall include failure in the realization of foreign exchange, racketeering in the Foreign Exchanges transactions and reserves and the foreign exchanges which are non-repatriating in nature. 

In case of violation under these sections, Enforcement Directorate can lead to the arrest of the convict, or a penalty of up to three times the sum involved can be levied.

PMLA Related Offences

The power of the Enforcement Directorate is to conduct the search, seize, freeze or attach the property of the accused once found guilty of committing an offence under PMLA. These offences amount to criminal offences and are dealt with accordingly.

Cases under the Fugitive Economic Offenders Act

The Fugitive Economic Offenders Act, 2018 restricts the economic offenders from staying outside the country’s jurisdiction in order to protect themselves from evading the law of the country. But Under the Act, the Enforcement Directorate has been conferred with the power to collide with the Government of India and other foreign governments to trace and arrest the guilty.

Various methods of filing Complaint to Enforcement Directorate

Step 1: Filing Complaints with Other Agencies

 A person desirous of reporting a matter relating to the FEMA and PMLA, first of all, they, have to register their complaint with any agency or with the police department other than the Enforcement Directorate. Before making complaints to Enforcement Directorate, a person shall file a complaint to any other agency or the Police department, after which it comes to the Enforcement Directorate to investigate the matter and take required action against the accused.

PMLA consists of 157 sections illustrating the offences relating to money laundering. If any of the offences registered in the complaint is one of these 157 offences as listed under PMLA, then the power of the Enforcement Directorate is to take action on the complaint directly. The Officers of the Directorate have the power to investigate, conduct the search and seize the property of such person against whom the complaint is filed.

 Step 2: Sending the complaints to Enforcement Directorate directly

Although a person is not allowed to approach the Enforcement Directorate directly, however, they can send their complaint relating to illegalities in money laundering and foreign exchange to the following address:

Director,
Enforcement Directorate,
6th Floor, Lok Nayak Bhawan,
Khan Market,
New Delhi- 110003

A person is also entitled to file an application with a court that can further refer the matter to the Enforcement Directorate to be investigated by the Enforcement Directorate agency directly.

Is it possible for the Enforcement Directorate takes action on its own?

The Enforcement Directorate is not empowered to take any action on its own (suo moto). It can take action only when a complaint is filed. The power of the Enforcement Directorate Agency is to attach the property of the accused and to arrest them also. The matter is resolved through adjudication by normal courts or through the PMLA court.

The procedure of investigation after the Complaint Filing

1. Searching of a place or a person: Once the complaints to Enforcement Directorate are registered with any agency or the Police, the Officers of the Enforcement Directorate shall report the same to the Magistrate according to Section 157 of the Code of Criminal Procedure (CrPC). After receiving the Magistrate’s approval, the Officers have the power to search any place, property, or vehicle of the accused or break down any safe or locker in order to exercise their power.

The Officers are also bestowed with the power to search any person if they have sufficient reasons to believe that the said person could be involved in a crime. Section 19 of the PMLA empowers the Officers to arrest any person if they have any or sufficient reason to believe that there is an involvement that relates to money laundering.

 2. Seizure or confiscation of any Property: The Enforcement Directorate Officers are bestowed with the power to seize or confiscate any property if they have sufficient reasons to believe the involvement in the money laundering case. Section 17 and 18 of the PMLA prescribe the relevant provisions in respect of the search and seizure of the property connected with the laundered money.

 3. Preparation of Report: Once the Investigation is successfully conducted, A report detailing the entire matter shall be prepared by the officers. The report shall contain the details of the investigation undertaken by the officers, details of places or persons under investigation, details of the attached property, if any, and details of the person arrested, if any.

 4. Taking action relied upon the Report: After the preparation of the report, the matter can either be resolved once and for all by the Enforcement Directorate’s own adjudicating body, or the same may be referred to the CBI court or the Supreme Court. The aggrieved party is entitled to file an appeal with a higher court. For the purpose of filing the appeal, the agency has its own appellate panel.

In the event the FEMA’s provisions are violated, the court shall impose a fine which may amount to three times the amount involved, as well rigorous imprisonment stretching up to seven years.

Read Our Article: Enforcement Directorate (ED) and its Functions