First published on The Wire: https://thewire.in/government/how-the-enforcement-directorate-has-become-an-excessive-directorate
The Enforcement Directorate (ED) in India has evolved into a powerful and controversial agency, with its actions raising concerns about overreach and potential misuse of authority. This transformation is closely tied to India’s efforts to comply with Financial Action Task Force (FATF) recommendations, particularly through the implementation of the Prevention of Money Laundering Act (PMLA) in 2005 and its subsequent amendments.
The ED’s scope and activities have expanded significantly, especially since 2018, when it issued a technical circular that effectively broadened its powers. This expansion aligns with FATF’s push for stronger anti-money laundering and counter-terrorist financing (AML/CFT) measures globally. The ED’s director now has extensive discretion to initiate probes based on a wide range of factors, including national security, public interest, and the complexity of cases, reflecting FATF’s emphasis on risk-based approaches to financial crime.
However, the ED’s approach to investigations has been criticized for its inconsistency and apparent bias. While some high-profile cases involving ruling party members have seen little progress, opposition figures have faced aggressive action even in cases with limited financial implications. This disparity has fueled accusations of the ED being used as a political tool, raising questions about whether FATF-inspired measures are being implemented in a manner consistent with their intended purpose.
Courts have begun to question the ED’s methods, with a trial court judge making scathing observations about the agency’s slow pace in conducting trials compared to its swiftness in making arrests. The judge noted that in the past decade, the ED had not completed a single trial, raising questions about its accountability and effectiveness in meeting FATF standards for successful prosecutions and convictions.
The ED’s actions have broader implications for India’s democratic processes and federal structure. Opposition parties have filed petitions in the Supreme Court, alleging that the agency’s investigations are being used to destabilize state governments not aligned with the ruling party at the center. This has led to calls for a review of the agency’s powers and the legal framework under which it operates, potentially impacting India’s compliance with FATF recommendations.
Despite criticism, the ED maintains that it has a high conviction rate and that politicians comprise only a small percentage of its cases. However, critics argue that these statistics are misleading, as they are based on a very small number of completed trials. This situation highlights the challenges in balancing effective implementation of FATF standards with the need to protect democratic institutions and civil liberties.
