Needless move

General Studies Paper 2

Context

• By allowing ED chief’s continuance, the SC has undermined its own authority.

Details

• The order allowing Sanjay Kumar Mishra, head of the Enforcement Directorate (ED), to continue till September 15 at the Centre’s request is needlessly accommodative.
• Yet, without any submission that the process to select his successor has been set in motion, the Court has invoked an undefined “larger national interest” to allow him to go on up to September 15. It was a self-serving application in the first place.
• The ostensible reason that the government finds his services indispensable is that he is helming the country’s efforts to demonstrate its framework to counter money laundering and the financing of terrorism during a country review before the Financial Action Task Force (FATF).

Enforcement Directorate (ED)

• The Enforcement Directorate (ED) is a specialized financial investigation agency under the Ministry of Finance.
• It is responsible for enforcing the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) and the Foreign Exchange Management Act, 1999 (FEMA) in cases of economic offences and cross-border crimes.
• The ED was established in 1956 as a wing of the Department of Revenue to deal with foreign exchange violations under the Foreign Exchange Regulation Act 1947 (FERA).
• Over the years, it has evolved into a multi-disciplinary agency with expertise in financial intelligence, cyber forensics, legal analysis and international cooperation.

The enforcement Directorate deals with 4 laws

• The Prevention of Money Laundering Act, 2002 (PMLA).
• The Foreign Exchange Management Act, 1999 (FEMA).
• The Fugitive Economic Offenders Act, 2018 (FEOA).
• Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)

Significance

• The ED plays a vital role in combating economic crimes and safeguarding the national security and economic interests of the country.
• It works closely with other agencies such as the Central Bureau of Investigation (CBI), the Income Tax Department (ITD), the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the National Investigation Agency (NIA), the Financial Intelligence Unit (FIU) and the Narcotics Control Bureau (NCB).
• The ED also represents India in various international forums such as the Financial Action Task Force (FATF), the Asia/Pacific Group on Money Laundering (APG) and the G20 Anti-Corruption Working Group.
• It participates in bilateral and multilateral dialogues and joint investigations with foreign agencies on issues related to money laundering, terrorist financing, tax evasion, black money, cybercrime and other cross-border offences.

Challenges

• Used as a Political Tool by the ruling party
• Poor track record of conviction and recovery
• Lacks adequate resources and manpower

Addressing the challenges

• Strengthening the autonomy
• Enhancing the Professionalism
• Expanding the infrastructure
• Improving the coordination and cooperation
• Streamlining the legal framework

Conclusion

• As the agency that administers the law against money laundering, the ED may have a key role in preparing the country’s presentation, but it is difficult to believe that the process depends on one individual. The Court’s permissiveness detracts from its resolve to hold the government to account for actions that it had itself declared illegal.
• By implementing necessary reforms and improvements, the ED can enhance its credibility and reputation as a professional and independent agency that works for the public interest.