Article:
The Enforcement Directorate, under the direction of the Prevention of Money Laundering Act (PMLA) Court in Mumbai, has transferred assets amounting to Rs. 8,441.50 crore to public sector banks that incurred losses due to alleged frauds by Vijay Mallya, Nirav Modi, and Mehul Choksi. These individuals have been classified as ‘Fugitive Economic Offenders’ by the enforcement body.
Fugitive Economic Offenders Act, 2018
The Fugitive Economic Offenders Act, 2018, focuses on confiscating the properties of economic offenders that have fled the country to avoid criminal prosecution or are refusing to return for prosecution. An individual is deemed a Fugitive Economic Offender (FEO) if an arrest warrant has been issued because of their engagement in an offence listed in the Act worth at least Rs. 100 crore.
Listing and Declaration of an FEO
An array of offences, including counterfeiting government stamps or currency, cheque dishonour, money laundering, and transactions defrauding creditors, are listed in the Act. Upon reviewal of an application, a special court (under PMLA, 2002) can declare an individual as an FEO. Following this, properties involved in the crime, Benami properties, and any other property in India or abroad may be confiscated. Rights and titles over the confiscated property are then vested in the central government, free from encumbrances.
Restrictions and Powers Under the Act
The Act not only restricts a declared FEO from filing or defending any civil claim but also extends this restriction to companies or limited liability partnerships where the offender has majority stakes or holds a key managerial position. The authorities may provisionally attach properties of an accused while the application is still under Special Court review. The officials under the PMLA, 2002 will use their powers under the Fugitive Economic Offenders Act. These powers align with those of a civil court and enable the search of individuals and premises suspected of possessing records or proceeds of the crime.
Prevention of Money Laundering Act (PMLA)
Money laundering involves concealing illegally obtained proceeds in a manner that they seem to arise from legitimate sources. This is often associated with grave crimes like drug trafficking, robbery, or extortion. Global money laundering, according to the International Monetary Fund (IMF), accounts for about 2 to 5% of World GDP. PMLA specifies punishments for money laundering and provisions attachment of “proceeds of crime” property. The Enforcement Directorate (ED) and the Financial Intelligence Unit – India (FIU-IND) are tasked with investigating offences under the PMLA.
Enforcement Directorate
The Enforcement Directorate is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance. Initiated as an ‘Enforcement Unit’ in 1956, it was renamed ‘Enforcement Directorate’ the following year. The agency is responsible for enforcing laws under the Foreign Exchange Management Act, 1999 (FEMA) and the Prevention of Money Laundering Act, 2002 (PMLA).
