Category: PMLA

Directorate of Enforcement is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India, which enforces the following laws: –

1. Foreign Exchange Management Act,1999 (FEMA) – A Civil Law, with officers empowered to conduct investigations into suspected contraventions of the Foreign Exchange Laws and Regulations, adjudicate, contraventions, and impose penalties on those adjudged to have contravened the law.

2. Prevention of Money Laundering Act, 2002 (PMLA) – A Criminal Law, with the officers empowered to conduct investigations to trace assets derived out of the proceeds of crime, to provisionally attach/ confiscate the same, and to arrest and prosecute the offenders found to be involved in Money Laundering.

The Prevention of Money Laundering Act, 2002 [PMLA] mandates that the investigation of the offence of money laundering be linked to the Scheduled Offences investigated by the concerned Central or State Law Enforcement Agencies. The scheme of PMLA thus necessitates inter-agency coordination to take effective action against persons who are found by the Law Enforcement Agencies to be involved in criminal activity. Such action under PMLA entails attaching and confiscating tainted assets, and prosecuting persons/entities for the offence of money laundering.

Organization set up

The Directorate of Enforcement, with its Headquarters at New Delhi is headed by the Director of Enforcement. There are five Regional offices at Mumbai, Chennai, Chandigarh, Kolkata and Delhi headed by Special Directors of Enforcement.

Zonal Offices of the Directorate are at Ahmedabad, Bangalore, Chandigarh, Chennai, Kochi, Delhi, Panaji, Guwahati, Hyderabad, Jaipur, Jalandhar, Kolkata, Lucknow, Mumbai, Patna and Srinagar. These are headed by a Joint Director.

The Directorate has Sub-Zonal Offices at Bhubaneshwar, Kozhikode, Indore, Madurai, Nagpur, Allahabad, Raipur, Dehradun, Ranchi, Surat, Shimla, Vishakhapatnam and Jammu which are headed by a Deputy Director.

Functions

The main functions of the Directorate are as under

1.Investigate contraventions of the provisions of Foreign Exchange Management Act, 1999(FEMA) which came into force with effect from 1.6.2000. Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties upto three times the sum involved can be imposed.

2.Investigate offences of money laundering under the provisions of Prevention of Money Laundering Act, 2002(PMLA) which came into force with effect from 1.7.2005 and to take actions of attachment and confiscation of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA, and to prosecute the persons involved in the offence of money laundering. There are 156 offences under 28 statutes which are Scheduled Offences under PMLA.

3.Adjudicate Show Cause Notices issued under the repealed Foreign Exchange Regulation Act, 1973 (FERA) upto 31.5.2002 for the alleged contraventions of the Act which may result in imposition of penalties. Pursue prosecutions launched under FERA in the concerned courts.

4.Processing cases of fugitive/s from India under Fugitive Economic Offenders Act, 2018. The objective of this Act is to provided for measures to deter fugitive economic offenders from evading the process of law in India by staying outside the jurisdiction of Indian Courts and to preserve the sanctity of the rule of law in India.

5.Sponsor cases of preventive detention under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974(COFEPOSA) in regard to contraventions of FEMA.

6.Render cooperation to foreign countries in matters relating to money laundering and restitution of assets under the provisions of PMLA and to seek cooperation in such matters.

Enforcement Directorate has attached assets worth valued at Rs.36,72,47,752/- of Nishad K, MD and his associates in the case of Morris Coin Crypto Currency Case under the Prevention of Money Laundering Act ,2002 in a cheating case. The attached assets include balances in multiple bank accounts of Nishad K and his companies, immovable property including land of an associate close to Nishad K and INR equivalent of crypto currencies purchased out of the proceeds of crime by a close associate.

ED initiated money laundering investigation on the basis of the FIR registered by Kerala Police. Kerala Police has registered multiple FIRs in various districts such as Malappuram, Kannur and others. As per the FIRs, more than 900 investors were cheated to the tune of Rs 1200 crore.

The money laundering investigation carried out so far revealed that Nishad K through his various companies such as M/s Long Rich Global, M/s Long Rich Technologies and M/s Morris Trading Solutions collected deposit money from the investors in the guise of Initial Coin Offer for the launch of Morris Coin Crypto Currency. Investors were impressed by conducting promotional events in the presence of celebrities, introducing the investors to flashy websites by provision of e wallets to each investor via web-based applications. The amounts so collected by duping. the investors were siphoned through various companies operated by him and his associates.

The deposits taken from the general public were illegal and without any statutory permission from any regulatory agencies. This was a ponzy schemes & investors were lured with the promise of very high return.

The money obtained was used for the purchase immovable properties, for the purchase of various other Crypto currencies, for the purchase of luxury cars and for spending in luxury hotels and resorts. In this regard, the crypto currencies such as Ethereum (5.92387265), BTC (0.08267646), BNB (5.51232875), YFI (0.023062), VET (4284.4), ADA (226.479601), USDT (35.88576551) totally valued at INR 25,82,794 were found and all the above crypto currencies, purchased out of the proceeds of crime, were converted into INR and attached by the Enforcement Directorate.

In addition, a search action was conducted under Section 17 of the PMLA,2002 at 11 premises situated across various States such as Kerala, Karnataka, Tamilnadu and New Delhi resulting in identification of details worth of several Crore of immovable and other property details. The premises includes the residential and office premises of the entities that are related to Nishad K and his companies.

Further investigation is under progress.