Fugitive Economic Offenders
The Enforcement Directorate has transferred assets worth Rs. 8,441.50 crore to public sector banks that suffered losses to the tune of Rs. 22,585.83 crore due to frauds committed allegedly by Vijay Mallya, Nirav Modi and Mehul Choksi.
All the three have been declared ‘Fugitive Economic Offenders’ by PMLA (Prevention of Money Laundering Act) Court in Mumbai.
Extradition requests to the United Kingdom (UK), Antigua, and Barbuda, have also been filed against all the three accused.
Fugitive Economic Offenders Act, 2018:
- Itseeks to confiscate properties of economic offenders who have left the country to avoid facing criminal prosecution or refuse to return to the country to face prosecution.
- Fugitive Economic Offender (FEO):A person against whom an arrest warrant has been issued for committing an offence listed in the Act and the value of the offence is at least Rs. 100 crore.
- Some of the offences listed in the act are:
- Counterfeiting government stamps or currency.
- Cheque dishonor.
- Money laundering.
- Transactions defrauding creditors.
Declaration of a Fugitive Economic Offender:
- After hearing the application, a special court (designated under the PMLA, 2002) may declare an individual as a fugitive economic offender.
- It may confiscate properties which are proceeds of crime, Benami properties and any other property, in India or abroad.
- Upon confiscation, all rights and titles of the property will vest in the central government, free from encumbrances (such as any charges on the property).
- The central government may appoint an administrator to manage and dispose of these properties.
Bar on Filing or Defending Civil Claims:
- The Act allows any civil court or tribunal to prohibit a declared fugitive economic offender from filing or defending any civil claim.
- Further, any company or limited liability partnership where such a person is a majority shareholder, promoter, or a key managerial person, may also be barred from filing or defending civil claims.
- The authorities may provisionally attach properties of an accused, while the application is pending before the Special Court.
- The authorities under the PMLA, 2002 will exercise powers given to them under the Fugitive Economic Offenders Act.
- These powers will be similar to those of a civil court, including the search of persons in possession of records or proceeds of crime, the search of premises on the belief that a person is an FEO and seizure of documents.
Prevention of Money Laundering Act (PMLA):
- Money Laundering:
- Money laundering is concealing or disguising the identity of illegally obtained proceedsso that they appear to have originated from legitimate It is frequently a component of other, much more serious, crimes such as drug trafficking, robbery or extortion.
- According to the IMF, global Money Laundering is estimated between 2 to 5% of World GDP.
- Salient Features:
- Punishment for money-laundering:
- Money laundering is punishable with rigorous imprisonment for a minimum of 3 years and a maximum of 7 years and Fine.
- If the crime involves the Narcotic Drugs Psyychotropic Narcotic Drugs and Psychotropic Substances Act, 1985, the punishment can go up to 10 years, along with fine.
- Powers of attachment of tainted property:
- The property is believed to be “proceeds of crime” and can be provisionally attached for 180 days. Such an order is required to be confirmed by an independent Adjudicating Authority
- The Enforcement Directorate (ED)is responsible for investigating offences under the PMLA.
- Also, the Financial Intelligence Unit – India (FIU-IND)is the national agency that receives, processes, analyses and disseminates information related to suspect financial transactions.
- Burden of proof:A person, who is accused of having committed the offenceof money laundering, has to prove that alleged proceeds of crime are in fact lawful property.
- Punishment for money-laundering:
- Directorate of Enforcement is a specialized financial investigation agencyunder the Department of Revenue, Ministry of Finance.
- On 1stMay 1956, an ‘Enforcement Unit’ was formed, in the Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947.
- In the year 1957, this Unit was renamed as ‘Enforcement Directorate’.
- ED enforces the following laws: