What happens to money seized by Enforcement Directorate during raids

In recent months, several leaders from opposition parties have been targeted by ED through bookings, raids, or arrests. Let's understand what happens to the cash seized by ED during raids

Delhi Chief Minister Arvind Kejriwal was arrested on Thursday by the Enforcement Directorate (ED) in connection with the Delhi liquor policy case. In recent months, numerous leaders from the opposition have been targeted by the ED through bookings, raids, interrogations, or arrests. Those affected include former Delhi Deputy CM Manish Sisodia, JMM leader Hemant Soren, and Bharat Rashtra Samithi (BRS) leader K Kavitha.

The surge in cases handled by the ED is primarily linked to the Prevention of Money Laundering Act (PMLA).

Beyond political figures, in January 2024, the ED conducted 19 raids in various locations across Delhi NCR, Chandigarh, Haryana, Punjab, and Gujarat. These operations were part of a money laundering investigation into companies in India receiving backing from Chinese nationals. The raids resulted in the seizure of several incriminating documents, digital records, and Rs 1.3 crore in cash.

 

Future Gaming and Hotel Services PR, which gained attention for its donation of Rs 1,368 crore between October 21, 2020, and January 9, 2024, has been subject to multiple ED raids. On April 2, 2022, it was reported that the ED had confiscated assets worth Rs 409.92 crore belonging to the firm.

What happens to cash recovered by ED?

The probe agency is authorised to seize money, but it cannot retain the recovered cash. According to protocol, when the agency recovers cash, the accused is offered a chance to explain the source of the funds.

"For example, if the ED recovers Rs 5 lakh, the individual in question must account for the origin of these funds. Suppose they claim to have recently withdrawn the amount from a bank via cheque; in that case, they are required to present the corresponding withdrawal slip as evidence. Should they fail to produce this documentation, the ED is authorised to confiscate the money," Mumtaz Bhalla, Partner, Economic Laws Practice explains.

Initially regarded as potential proceeds of crime or black money, the funds are then seized under the PMLA, she said.

State Bank of India (SBI) officials are summoned to count the recovered money using a note-counting machine. After counting is complete, ED officials, in the presence of bank officials, prepare a seizure list.

This seizure memo records the total amount of cash recovered and the count of currency notes in denominations such as 2000, 500, and 100.

The money is then sealed in boxes before witnesses and transported to a bank branch in the relevant state, where it is deposited into a Personal Deposit account held by the agency.

Subsequently, the funds are transferred to the central government treasury.

Mumtaz Bhalla emphasised that the confiscated funds are off-limits to the ED, banks, and government during the trial period. Should the accused be convicted, the sum is transferred to the Centre as 'public money'. If the accused is acquitted, the money is returned to them.