Don't hinder economic activity with mindless probe: FM to ED

ED primarily investigates contraventions of the provisions of PMLA and the Foreign Exchange Management Act

Finance Minister P Chidambaram today asked the Enforcement Directorate (ED) not to hinder economic activity by mindless investigation into money-laundering allegations and to exercise caution while choosing cases for prosecution under the Prevention of Money Laundering Act (PMLA).

“A word of caution is necessary. We must be extremely selective. Otherwise, we will be overwhelmed with cases we need to prosecute,” he said at the Enforcement Day Celebration today.

ED primarily probes contravention of the provisions of PMLA and the Foreign Exchange Management Act. Its area of investigation had widened after an amendment to PMLA in 2012 removed the limit of Rs 30 lakh for initiating such cases for economic offences, and expanded the definition of offence to include concealment, acquisition, possession and use of proceeds of crime as criminal activities.

Chidambaram cautioned, given the staff shortage, ED should focus on important cases. He appealed to the Central Vigilance Commission, the Union Public Service Commission and the Department of Personnel and Training to understand the gravity of the situation and work harder to ensure vacant seats are filled.

ED is looking into allegations of money laundering in some high-profile cases such as those related to Bharti-Walmart and, recently, Saradha Group.  It has a strength of only 660 people at present. It has a sanctioned staff strength of 2,064, but 1,404 positions are lying vacant.

“We must equip ED with human resources and technology to deal with sophisticated money-laundering crimes…. But all legitimate trading and investment activity, both inward and outward, must be protected,” he said, adding it was important agencies across the world shared technologies and chased offenders. He also suggested bringing in officers from state police forces to help investigate and prosecute money-laundering cases.

On the Act’s provisions, he said, PMLA rested on the principle of a predicate crime and when there was an offence that had anything to do with proceeds of a crime.

“Even if you are acquitted in the trial of a predicate crime, it is possible you could be convicted of an offence under money laundering. The present position is a correct one. One could still establish the proceeds of crime had been laundered,” he said.

LONG TO-DO LIST
Key cases ED is probing for Fema/PMLA violations

* Irregularities in the 2G spectrum case

* Corporate fraud at Reebok India

* Violation of foreign exchange regulation by Bharti-Walmart

* Fema violation by BCCI and its officials

* Money-laundering case against Hasan Ali Khan

* Financial irregularities by Saradha Group