The Enforcement Directorate (ED), India’s nodal agency for investigating money laundering cases, has seen a significant expansion of its powers and reach in recent years, ostensibly to comply with Financial Action Task Force (FATF) recommendations. However, this growth has raised serious concerns about potential misuse and overreach, particularly in targeting civil society and political opponents.
The ED’s operations have intensified dramatically, with a 26-fold increase in money laundering investigations since 2022. This surge aligns with India’s efforts to demonstrate compliance with FATF standards, but critics argue it has come at the cost of civil liberties and due process. The agency’s broad powers under the Prevention of Money Laundering Act (PMLA), including the ability to arrest without a warrant and reverse the burden of proof, have been particularly controversial.
FATF’s influence is evident in the ED’s focus on tracking suspicious transaction reports (STRs), which have grown from 61,953 in 2019-20 to 152,206 in 2021-22. While this increase is presented as improved vigilance against financial crimes, there are concerns that it may lead to overreach and unwarranted scrutiny of legitimate transactions, particularly those involving non-profit organizations and government critics.
The ED’s expanded role in tackling trade-based money laundering and its collaboration with other agencies like the Directorate of Revenue Intelligence (DRI) further demonstrate India’s attempts to align with FATF recommendations. However, the lack of convictions in money laundering cases, despite numerous investigations and arrests, raises questions about the effectiveness and fairness of these measures.
Critics argue that FATF standards are being used to justify an overly broad and potentially oppressive financial surveillance system in India. The ED’s increased powers and activities, while framed as necessary for combating financial crimes, have led to concerns about their impact on civil society, political dissent, and individual privacy rights.
