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Enforcement Directorate (ED) – Work of ED, Functions, ED UPSC PDF

By BYJU'S Exam Prep

Updated on: November 14th, 2023

Enforcement Directorate was established on 1 May 1956 with its headquarters in New Delhi. The Enforcement Directorate or ED is a law enforcement agency and economic intelligence is endowed with the responsibility of enforcing economic law and fighting economic crime in India such as money laundering and foreign exchange violations. The director of the Enforcement Directorate is appointed in accordance with the provisions of the Central Vigilance Commission Act 2003. The ED faces major ordeals in tracing the money trails, as mostly the money is stored in foreign countries.

The Enforcement Directorate [ED] is responsible to the Department of Revenue under the Ministry of Finance. It is also responsible for the enforcement of the Foreign Exchange Management Act 1999 (FEMA) and a few provisions under the Prevention of Money Laundering (PMLA) Act, 2002. The aspirants must prepare comprehensively for the Enforcement Directorate [ED] to score well in the exam.

What is Enforcement Directorate [ED]?

The ED Department or Enforcement Directorate (ED) is a multi-disciplinary organization that is endowed with the responsibility of investigating cases related to money laundering and foreign exchange law violations. A number of statutes are enforced by the Enforcement Directorate. The full form of ED is Enforcement Directorate. These acts are-

  1. Prevention of Money Laundering Act 2002
  2. Foreign Exchange Management Act 1999
  3. Foreign Exchange Regulation Act 1973
  4. Fugitive Economic Offenders Act 2018
  5. Sponsoring Agencies under Conservation of Foreign Exchange and Prevention of Smuggling Activities 1974.

Functions of the Enforcement Directorate

The Enforcement Directorate (ED) is a law enforcement agency responsible for enforcing economic laws and fighting economic crime in India, such as money laundering or financial fraud. Some of the main functions of the Enforcement Directorate are:

  • Enforcement of Economic Laws: The Enforcement Directorate enforces various economic laws such as the Prevention of Money Laundering Act (PMLA), the Foreign Exchange Management Act (FEMA), and the Prevention of Corruption Act (PCA).
  • Carrying out Searches and Seizures: According to Section 50 of PMLA, the Enforcement Directorate is also capable of carrying out a direct search and seizure without having to call the person for questioning.
  • Confiscating Illegal Assets: The ED has the power to seize and confiscate properties and assets that have been acquired through illegal means. These assets may include money, real estate, vehicles, and other valuables.
  • Sponsoring agency under COFEPOSA: The Directorate of Enforcement is authorized to sponsor the preventive detentions for the contravention of the Conservation of Foreign Exchange and Prevention of Smuggling Activities 1974.

Director of ED – Appointment of Enforcement Directorate

The appointment of the ED director is based on the provisions of the Central Vigilance Commission Act, 2003. The Centre had appointed the director on the recommendation of a committee, with the Central Vigilance Commissioner as chairperson. Other committee members are secretaries in the Finance, Home, and Personnel & Training ministries.

ED Director Tenure

The Enforcement Directorate’s director has 2-year security of tenure according to (Central Vigilance Commission Act ) 2003, recently an amendment has been taken to it according to which its director’s tenure can be increased up to 3 years meaning total tenure can be 5 years.

Challenges of ED

In accordance with the Enforcement Directorate officers, acquiring information on accounts and money stores abroad to develop a trail is considered to be one of the biggest challenges. In pursuit of acquiring information, the officials send letters to numerous countries.

  • On behalf of the investigative agency, the Ministry of External Affairs sends letters rogatory from the courts to foreign courts. However, the challenge here is rarely the letters are answered. This again poses ordeals to the investigative process.
  • To follow a money trail, the officers need to investigate the links that are highly difficult to spot. Mostly the money is deposited off-shore. The officials usually do not receive help or support from foreign countries. Foreign countries are reluctant to share the financial details of any person as they are not mandated to do so.
  • There are numerous cases, where the links could not be found due to the non-cooperation of foreign countries. One famous example is of 2G scam. The letter was sent to numerous countries, but the letters sent to Russia, Norway, Singapore, Mauritius, France, and Cyprus were not answered.

Allegations on Enforcement Directorate

The ED has often been attacked for initiating investigations, raiding, and questioning mainly leaders of the opposition parties. Many opposition leaders such as P. Chidambaram, D.K. Shiv Kumar, Sharad Pawar, Praful Patel, Akhilesh Yadav, and other such leaders of different political parties have been taken under investigation by the Enforcement Directorate in recent months. And now the ED is directly after Rahul Gandhi the former President of the Indian National Congress.

Achievements of the Enforcement Directorate

When we talk about an agency that curbs the menace of white-collar crimes in India, it is impossible not to mention the Enforcement Directorate. This is because it has worked extensively and caught many big criminals who increase the economic inequality in India. Some of the achievements of ED are as follows:

  • In its investigation of Karti Chidambaram, the former Home Minister allegedly had accepted a bribe of 50 lahks to clear the 300 Chinese visas.
  • It was the result of the Enforcement Directorates’ efforts in Kashmir that the complete Abdullah family was filtered. Even at present, the ED continues its investigation and Farooq Abdullah has to face public humiliation.
  • Congress leader DK Shiv Kumar was also facing charges under the money laundering act by the Enforcement Directorate. As for now, his bail has been suspended but the Enforcement Directorate has still tightened its grip on him.
  • The ED arrested the minister Satyendra Jain for the money laundering charges imposed by the Enforcement Directorate.
  • Indian National Congress leader Rahul Gandhi was taken under custody by the ED for the inquiry related to a money laundering case.

Powers of ED

The Enforcement Directorate (ED) has been given certain powers to enforce economic laws and fight economic crimes in India. Some of the key powers of the Enforcement Directorate include:

  • The ED has the power to arrest individuals who are suspected of committing economic offenses under the Prevention of Money Laundering Act (PMLA).
  • The ED can conduct searches and seizures of properties and assets that have been acquired through illegal means.
  • The Enforcement Directorate has the power to freeze bank accounts of individuals and entities suspected of being involved in money laundering or other economic offenses.
  • The ED can confiscate properties and assets that have been acquired through illegal means.

Overall, the Enforcement Directorate agency plays a crucial role in maintaining law and order in India’s financial system and protecting the interests of the citizens.

Enforcement Directorate UPSC

The Enforcement Directorate is an essential and unavoidable topic of UPSC. To prepare the directorate of enforcement topic and other relevant concepts in more detail download NCERT Books or UPSC Books for Polity. The topic is quite an essential topic in regard to the Prelims and Mains’ point of view.

Enforcement Directorate [ED] UPSC Notes

The aspirants willing to appear in the IAS exam this year can also get the syllabus. Here the aspirants are also facilitated with the UPSC Previous Year’s Question Paper and other study materials.

ED UPSC Questions

It is highly essential for the candidates to solve the Enforcement Directorate [ED] questions regularly to be able to solve the questions within the stipulated time frame and be able to gain insights into the concepts. Check the types of questions that are asked from this topic, and bring forth a remarkable strategy to solve the questions.

Question: Consider the statements given below and choose the correct options; [1] The ED headquarter is situated in Mumbai. [2] The Enforcement Directorate enforces economic laws and fights economic crime on behalf of the Government of India. [3] The Enforcement Directorate is a multi-disciplinary organization that enforces the provision of both the foreign exchange management Act 1999 popularly known as FEMA and the Prevention of Money Laundering Act 2002 popularly called PMLA. [4] The Enforcement Directorate is administered by the Ministry of Home Affairs.

Choose the correct option below- [A] 1 is true 2 is false, [B] 2 and 3 are correct, [C] All are correct,  [D] None of the above is correct

Answer:  Option B [2 and 3 are Correct].

Question: With reference to the Enforcement Directorate consider the following statements. [1] It is endowed with the responsibility of implementing the provisions of FEMA and PMLA. [2] It is a statutory body [3] The ED can register a case on its own like CBI.

Which of the following statements are correct? [A] 1 only, [B] 2 and 3 only, [C] 3 only [D] 1 and 3 only.

Answer: Option A [1 only] It is endowed with the responsibility of the implementation of the provisions of FEMA and PMLA.

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