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July 12, 2020

ED conducted searches at 8 locations in Delhi Directors of several tour and travel companies and their CAs

by Rubina Dsouza in Compliance Law

ED conducted searches at 8 locations in Delhi Directors of several tour and travel companies and their CAs

Introduction

The Directorate of Enforcement is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government of India.

The prime objective of the ED is the enforcement of two key Acts namely, the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA)

In concurrence with its objectives, the Enforcement Directorate (ED) had conducted searches at eight locations of tour and travel companies in Delhi and Ghaziabad in a case related to unauthorized foreign exchange dealings. On 11th July, 2020 the ED said that it has seized Rs 3.57 crore unaccounted cash in those raids.

What was uncovered at this raid?

  1. The probe under FEMA, 1999 were initiated against various entities including tour and travel companies on basis of specific inputs that they were involved in the unauthorised receipt of foreign remittances through payment gateways in the name of providing e-visa services to foreigners
  2. Officials in the central financial probe agency said the searches were conducted at eight different locations in Delhi and Ghaziabad, including residences and offices of directors of many tour and travel companies and their chartered accountants (CAs) on July 9, 2020 and seized unaccounted Indian currency of Rs. 3.57 Crores.
  3. Several incriminating documents and digital records were also recovered in the searches at these premises.
  4. Investigations conducted in the cases so far revealed that two such entities received foreign remittance of more than Rs 200 crore for processing Indian e-visa applications of foreigners without any authorisation from the Government of India.
  5. These entities were also involved in high value suspicious transactions.
  6. The probe also revealed that certain CAs played a key role in managing the affairs of these entities and were behind the suspicious transactions carried out by them.

The seizure of unaccounted cash of Rs 3.57 crores during the search operations has raised further suspicion about the operations of such entities and their blatant violation of the statutory requirements. Further investigation, in this case, is under progress.

The main functions of the ED are as under:-

  1. Investigate contraventions of the provisions of FEMA. Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties upto 3 times of the sum involved can be imposed
  2. Investigate offences of money laundering under the provisions of PMLA 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.
  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. 
  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.

India’s income tax (IT) department and the Enforcement Directorate (ED) have over the past decade become busier than ever, but still struggle to see their cases through a court of law and secure effective convictions.

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