Money Laundering and the Role of the Enforcement Directorate
- Current Affair Writer
- Apr 1, 2024
- 2 min read
Money laundering represents the process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to be earned legally. It typically involves three steps: placement, layering, and integration. The Enforcement Directorate (ED) is a key agency in India tasked with combating money laundering and enforcing economic laws that prevent financial crimes. Here's a detailed breakdown:
Money Laundering: Key Aspects
Definition: Transforming profits from illegal activities into ostensibly legitimate assets.
Process:
Placement: Introducing illicit funds into the financial system.
Layering: Disguising the origin of the funds through a series of complex transactions.
Integration: Reintroducing the laundered money into the economy as clean money.
Enforcement Directorate (ED): Overview
Function: The ED is responsible for enforcing two key economic laws in India: the Foreign Exchange Management Act (FEMA), 1999, and the Prevention of Money Laundering Act (PMLA), 2002.
Objectives:
Investigating instances of money laundering in India.
Identifying and confiscating the proceeds of crime.
Regulating foreign exchange transactions to prevent money laundering.
Powers:
Conduct raids and searches.
Freeze assets suspected to be linked to money laundering.
Summon individuals for questioning related to financial crimes.
Important Points to Remember
Global Cooperation: The ED collaborates with international agencies to tackle cross-border money laundering and terrorism financing.
Recent Amendments: The PMLA and FEMA have been updated to enhance the ED's powers and expand the scope of money laundering investigations.
Significant Cases: The ED has been involved in high-profile cases, highlighting its role in addressing corruption, black money, and financial fraud.
Examination Perspective
Understanding Mechanisms: Knowledge of money laundering processes and the ED's role is crucial for comprehending how financial crimes are investigated and curbed.
Legal Framework: Familiarity with the PMLA and FEMA provides insights into the regulatory landscape governing financial transactions and crime prevention.
Current Affairs: Awareness of recent ED investigations and amendments to economic legislations reflects the evolving nature of financial crime enforcement.
Reason it's important : Kejriwal’s arrest: allegations and defence
Published in : The Hindu
Date appeared in newspaper : 01 April 2024
Link to the article (might require a paid subscription) : https://www.thehindu.com/todays-paper/2024-04-01/th_international/articleGUMCK380B-6309448.ece
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