A much enlarged ED – what it means for fighting crime

The Enforcement Directorate (ED), which until a few years ago was a relatively junior partner in India’s intricate web of government probe agencies, is all set to play a role that was once the prerogative of the Central Bureau of Investigation (CBI). Probably, even larger.

As the principal agency responsible for spearheading the central government’s most crucial criminal and financial investigations, armed with the all-powerful Prevention of Money Laundering Act (PMLA), it now needs a much bigger staff than originally envisaged under law.

The agency has recently sent a detailed proposal for its cadre restructuring, seeking to treble its workforce from the current 2,068 to 6,000, to the Department of Revenue (DoR) under the Union Ministry of Finance, a recent media report indicated.

The ED, whose list of money laundering cases has gone up more than twice in the past three years ― 2,723 from 2019-20 to 2021-22, compared to the previous seven years, 1,262 from 2012-13 to 2018-19 ― has asked the central government to increase its strength by three times and establish offices in every state capital.

The ED, which also looks at foreign exchange law violations, took up 11,420 of these cases in the last three years compared to 13,473 in the previous seven, Union Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha recently.

Karnal Singh, former director of ED, told Moneycontrol that it was under his tenure that the ED began the process of recruitment, as the agency’s workload began to multiply. “When I had joined in 2015, there were 600 officials against a sanctioned strength of 2,068, and we started the process of filling up vacancies. We had requested the DoPT to set up a committee to increase the staff strength, given the increasing workload. That is now bearing fruit,” he said.

According to him, ED is the only agency authorised to investigate money laundering cases, which are on the rise. “It is supposed to handle PMLA cases, with a sanctioned strength of 2,068 persons, which is not sufficient. Every investigator has to conduct a thorough probe and quality investigation. So, the ED’s request is genuine,” he said.

The ED’s sanctioned strength includes all ranks at the top as well as assistant directors, enforcement officers, clerks, sepoys, multi-tasking staff, and stenographers.

But probing financial crime is not the job of any run-of-the-mill investigator. “What is needed in ED are people who are inquisitive, understand balance sheets and can streamline financial processes,” Singh said.

Given the rise in white collar crime, cases of financial misappropriation and money laundering, the staff needed is considerably higher than what the agency has at its disposal even now at 2,000-plus.

The ED has also sought to open a zonal office in every state capital and two in some big states such as Maharashtra, Madhya Pradesh, and Rajasthan. It currently operates through 21 zonal and 18 sub-zonal offices across five regions ― West, East, Central, South and North, apart from specialised Headquarters Investigation Units (HIUs) and Special Task Forces (STF).

The ED’s proposal comes against the backdrop of the Supreme Court, in July reiterating its wide powers sanctioned under the Prevention of Money Laundering Act, 2002. It effectively ratified the agency’s powers to summon individuals, make arrests, conduct raids, and attach properties.

The PMLA was enacted in 2002 and implemented on July 1, 2005, and FEMA in 1999 after repealing the Foreign Exchange Regulation Act (FERA) of 1973.

MoS Chaudhary also told Parliament that the ED registered 3,555 PMLA cases between April 2014 and March this year, out of a total of 5,422 cases registered till date. Of these, 1,180 were filed in 2021-22.

Says senior special counsel for the CBI, Ashok Bhan, “Economic liberalisation means more money coming into the country and more chances for white collar criminals to loot. There is a rise in high-value money laundering cases, cybercrimes involving cryptocurrency, and movement of funds by terrorists through various channels within India and abroad. Despite a robust legal framework, the nature of financial crimes has undergone a sea change because of the digital revolution, which can be anonymous, borderless, and instant. Hence, ED cadres need to be strengthened with proper training on latest technologies and they should be placed in various parts of the country.”

He told Moneycontrol that under the changed economic circumstances, the agency has done well to seek more staff.

If its proposal to increase the staff strength to 6,000 is accepted, the financial crime agency’s manpower will be even bigger than the CBI’s 5,800.

Over the last few years, the ED has aggressively gone after politicians, businessmen and companies involved in money laundering. The pace of its activities has attracted charges of witch-hunting by Opposition leaders, some of whom were also part of the suit in the Supreme Court challenging the agency’s power under PMLA.

Prashant Bhushan, public interest lawyer in the Supreme Court, told Moneycontrol that the increase in ED strength is suggestive of the times we live in. “All it means is that the draconian PMLA is going to be pursued with greater vigour. It just shows now that the ED, rather than the CBI, is the government’s preferred prosecution arm, because the CBI is not entirely in the hands of the government. The ED is now manned by handpicked men and the PMLA gives absolute powers of arrest even without lodging an FIR.”

Unlike ordinary laws, which are governed by safeguards under the Code of Criminal Procedure, the money laundering law, since its inception itself, gives extraordinary powers to ED officials.

When the police summons someone for questioning, they must disclose whether they consider them a suspect or a witness. The ED does not need to make any such a disclosure. A statement made to a police officer is inadmissible as evidence ― it cannot be used as a self-incriminating confession in a court of law. But there is no such protection under PMLA. Not making a truthful disclosure to the ED can itself result in punishment.

Neither is there any magisterial oversight. While every police FIR must be forwarded to a magistrate, and a copy of the FIR given to the accused, the ED need not provide a copy of the Enforcement Case Information Report (ECIR). This means the accused is not even aware of the charges against him/her until the ED files the prosecution complaint.

ED Chief Sanjay Kumar Mishra was granted a third extension last month, which will give him a total of five years at the helm. Bhushan says it goes against what the Supreme Court said about granting extensions.

The apex court is hearing several petitions challenging this extension, saying that fixed tenures are the hallmark of independence and the fact that an incumbent may get an extension will demolish the independence of the office.

Officials, however, believe that investigations have commenced in several high-profile cases with positive results in terms of attachment and confiscation of proceeds of crime related to bank fraud, corruption, drugs, human trafficking and terror financing. These cannot be rolled back.