Enforcement Directorate

•Pertains to the establishment of Directorate of Enforcement and the powers to investigate the violation of
any provisions of Act, rule, regulation, notifications, directions or order issued in exercise of the powers
under this Act. The Director have been empowered to take up investigations.

Enforcement Directorate
•
The Directorate of Enforcement is mainly concerned with the enforcement of the provisions of the FEMA
to prevent leakage of foreign exchange which generally occurs through the following malpractices.
2.Remittances of Indians abroad otherwise than through normal banking channels, i.e. through
compensatory payments.
3.Acquisition of foreign currency illegally by person in India.
4.Unauthorized maintenance of accounts in foreign countries.
5.Illegal acquisition of foreign exchange through Hawala.
6.Secreting of commission abroad.

Organizational Set-Up
*The Enforcement directorate, with its HQs at New Delhi has seven zonal offices at Bombay, Calcutta,
Delhi, Jalandhar, Madras, Ahmedabad and Bangalore. The zonal offices are headed by the
Dy. Directors
* The Directorate has 9 sub zonal offices at Agra,Srinagar, Jaipur, Varanasi, Trivendrum, Calicut,
Hyderabad, Guwahati and Goa, which are headed by the Asstt. Directors.

FEMA 1999
ENFORCEMENT DIRECTORATE
Established by Central Govt to investigate due adherence to the provisions of the Act by market
participants.
Concerned with enforcement of the provisions of the Act to prevent leakage of foreign exchange
occurring through various malpractices.
Directorate of Enforcement is responsible for detection of cases relating to violation and performance of
adjudicatory functions to curb malpractices

FUNCTIONS
To collect and develop intelligence relating to violation of provisions of FEMA.
To conduct searches of suspected persons, conveyances and premises for seizing incriminating
materials.
To enquire into and investigate suspected violations or provisions of FEMA.
To adjudicate cases of violations of FEMA for levying penalties and also for confiscating the
amounts involved in contraventions.
To realise penalties in departmental adjudication.
The Parliament has enacted the Foreign Exchange Management Act,1999 to replace the Foreign Exchange
Regulation Act, 1973. This Act came into force on the 1st day of June,2000. To investigate provisions of the Act, the
Central Govt. have established the Directorate of Enforcement with Director and other officers as officers of the
Enforcement.

ROLE OF ENFORCEMENT DIRECTORATE

The Directorate of Enforcement is mainly concerned with the enforcement of the

provisions of the Foreign Exchange Management Act to prevent leakage of foreign exchange
which generally occurs through the following malpractices
 
1)         Remittances of Indians abroad otherwise than through normal banking channels, i.e.
through compensatory payments.
 
2)        Acquisition of foreign currency illegally by person in India.
 
3)    Non—repatriation of the proceeds of the exported goods.
 
4)         Unauthorised maintenance of accounts in foreign countries.
 
5)         Under—invoicing of exports and over—invoicing of imports and any other type of
invoice manipulation.
 
6)        Siphoning off of foreign exchange against fictitious and bogus imports land by
 
7)        Illegal acquisition of foreign exchange through Hawala.
 
8)        Secreting of commission abroad.
 
Directorate has to detect cases of violation and also perform substantial adjudicatory functions to curb such
malpract ices.
 
ORGANISATION SET-UP
 
The Enforcement Directorate, with its Headquarters at New Delhi has seven zonal offices
at Bombay, Calcutta, Delhi, Jalandhar, Madras, Ahmedabad and Bangalore. The zonal offices
are headed by the Deputy Directors. The Directorate has nine sub—zonal offices at Agra,
Srinagar, Jaipur, Varanasi, Trivandrum, Calicut, Hyderabad, Guwahati and Goa, which are
headed by the Assistant Directors. The Directorate has also a Unit at Madurai, which is headed
by a Chief Enforcement Officer. Besides, there are three Special Directors of Enforcement and
one Additional Director of Enforcement,
 
FUNCTIONS
 
The main functions of the Directorate are as under:—
 
The main functions of the Directorate are as under
1 To enforce Foreign Exchange Management Act 1999 and Prevention of money
Laundering Act 2002.
2 To collect and develop intelligence relating to violation of the provisions of Foreign
Exchange Management Act and Prevention of money Laundering Act 2002.
3 To conduct searches of suspected persons, conveyances and premises and seize
incriminating materials (including Indian and foreign currencies involved)
4 To enquire into and investigate suspected violations of provisions of Foreign Exchange
Management Act and Prevention of money Laundering Act 2002.
5 To adjudicate cases of violations of Foreign Exchange Management Act penalties
departmentally and also for confiscating the amounts involved in violations.
6 To realize the penalties imposed in departmental adjudication;
7 To attach and confiscate properties involved in the act of Money laundering.
8 To arrest the person suspected to be involved in the act of money laundering.
9 To prosecute the person involved in the act of money laundering.
In addition to the above functions relating to the Foreign Exchange Management Act.
Directorate also processes and recommends cases for detention of habitual offender under the
Conservation of Foreign Exchange and Prevention of Smuggling Activities Act,1974
(COFEPOSA), which provides interalia for detention of a person with a intention of preventing
him from acting in a manner prejudicial to the conservation and augmentation of exchange.
 
PROCEDURAL PROVISIONS
 
For enforcing the provisions of various sections of FEMA,l999, the officers of
Enforcement Directorate of the level of Assistant Director and above will have to undertake the
following functions:
 
1)         Collection and development of intelligence/information.
 
2)         Keeping surveillance over suspects.
 
3)         Searches of persons/vehicles as per provisions of Income—tax Act,1961.
 
4)         Searches of premises as per provisions of Income—tax Act,1961.
 
5)         Summoning of persons for giving evidence and producing of documents as per
provisions of Income—tax Act,l96l.
 
6)         Power to examine persons as per provisions of Income—tax Act,196l.
 
7)         Power to lcall for any information/document as per provisions of Income—tax Act ,
1961.
 
8)         Power to seize documents etc. as per provisions of Income—tax Act,196l.
 
9)         Custody of documents as per Income—tax Act,196l.
 
10)       Adjudication and appeals- Officers of and above the rank of Dy Director of Enforcement,
are empowered to adjudicate cases of contravention of the provisions of the Act; these
proceedings which are quasi—judicial in nature, start with the issuance of show cause
notice; in the event of cause tshown by the Notice—not being found satisfactory, further
proceedings are held, vis. personal hearing, in which the noticee has a further right to
present his defence, either in person or through any authorised representative; on
conclusion of these proceedings, the adjudicating authority has to examine and consider
the evidence on record, in its entirety and in case the charges not being found proved, the
noticee is acquitted, and in the event of charges being found substantiated, such penalty,
as is considered appropriate as per provisions of section 13 of the Act can be imposed,
besides confiscation of amount involved in these contraventions.
 
The penalty imposed has to be deposited in the concerned office of the Dy. Director
within 45 days of the date of receipt of the Adjudication order. In case the party feels aggrieved
by the orders of the adjudicating authority, he/she/they can refer appeal, before the Appellate
Tribunal/Special Director (Appeal), Foreign Exchange. Whereas, another appeal lies to the High
Court, against the order of the Appellate Tribunal, however, only in the matters involving
question/points of Law.
 
PUBLIC GRIEVANCES MACHINERY
                    
 
The Directorate keeps a constant vigil over its officers/staff and strict action is taken
against anybody found/suspected to be involved in any undesirable activity. The Vigilance Cell
of the Directorate works under the direct supervision of the Director of Enforcement, and, at
present, it includes two very senior officers.