The Punjab National Bank (PNB) fraud instigator, Nirav Modi, recently had Rs. 329.66 crore worth of assets confiscated under the Fugitive Economic Offenders Act, 2018, Section 12(2) and (8). This event is part of a money laundering case where the Enforcement Directorate (ED) has already attached properties amounting to Rs. 2,348 crore. The Reserve Bank of India (RBI) is taking measures against such fraudulent actions by establishing an exclusive wing dedicated to banking fraud oversight.
Fugitive Economic Offenders Act, 2018
This Act aims to seize the properties of economic criminals who have fled the country to evade criminal prosecution or refuse to return to the country for the same. An offender under this act is any person against whom an arrest warrant has been issued for committing an offense recognized in the Act and the value of which is at least Rs. 100 crore. Some offenses listed under this act include counterfeiting government stamps or currency, cheque dishonor, money laundering, and transactions defrauding creditors.
Declaration of a Fugitive Economic Offender
Through hearing an application, a special court (designated under PMLA, 2002) may declare an individual as a fugitive economic offender. Properties that can be seized may include proceeds of crime, Benami properties, and other properties located within India or abroad. Once confiscated, all rights and titles of the property will vest in the central government free from encumbrances (charges on the property).
Bar on Filing or Defending Civil Claims
The Act permits any civil court or tribunal to prohibit a declared fugitive economic offender from filing or defending any civil claim. Any company or limited liability partnership wherein the offender is a majority shareholder, promoter, or key managerial person may also be barred from filing or defending civil claims.
Provisional Property Attachments
During the pendency of an application before the Special Court, the authorities can provisionally attach properties of an accused.
Exercise of Powers
The authorities under the PMLA, 2002, will exercise the powers given to them under the Fugitive Economic Offenders Act. These powers will be akin to those of a civil court, such as searching persons in possession of records or criminal proceeds, premises suspected to house an FEO, and seizure of documents.
The Enforcement Directorate (ED)
The ED is a specialized financial investigation agency operating under the Department of Revenue, Ministry of Finance. Originally formed as the ‘Enforcement Unit’ on May 1, 1956, it was renamed as ‘Enforcement Directorate’ in 1957. Its purview includes the enforcement of the Foreign Exchange Management Act, 1999 and the Prevention of Money Laundering Act, 2002.
By creating this article, we aim to clarify recent developments related to the PNB fraud case, explain the Fugitive Economic Offenders Act, 2018, and shed light on the role of the Enforcement Directorate. Your understanding is crucial for ensuring transparency and accountability in our economic systems.
Last Modified: February 8, 2024