SIT moots independent ED probe into money laundering

Agency can now only probe cases registered by CBI, police or IT Dept.

NEW DELHI, 16/08/2008: Justice M.B. Shah, President, National Consumer Disputes Redressal Commission, at Vigyan Bhavan, in New Delhi on August 16, 2008. Photo: R.V. Moorthy

The Special Investigation Team (SIT) on black money has recommended that money laundering investigations by the Enforcement Directorate should be allowed without any dependence on registration of cases by other agencies.

“We have suggested that investigations into money laundering should be allowed without registration of a case (by other agencies). But, for this legal provisions need to be changed. It is very difficult and will take some time,” SIT Chairman Justice M.B. Shah told The Hindu .

The Prevention of Money Laundering Act (PMLA) at present provides that the Enforcement Directorate (ED) can pursue only those cases which have been registered by agencies like the Central Bureau of Investigation (CBI), State police units and the Income-Tax Department, under provisions pertaining to the offences listed in the Act.

CBDT plea rejected

The CBI had last year sought statutory powers to carry out money laundering investigations. However, the proposal was turned down by the government. In the past, the Directorate of Revenue Intelligence and the Central Board of Direct Taxes have also made such demands.

Based on the SIT’s recommendations, the Central government had earlier brought in some crucial amendments to the PMLA, apart from the Income-Tax Act and the Foreign Exchange Management Act, to strengthen the legal framework for effective action against those holding unaccounted income.

A latest amendment to the PMLA empowers the ED to continue with the money laundering investigations even if the police case is closed in the court. The Directorate can still pursue the probe into a financial angle and file a separate charge sheet.

As regards the declaration of Rs.65,250 crore of unaccounted money under the Income Declaration Scheme launched by the Centre, Justice Shah said it appeared to be a good beginning. “But, it is a known fact that still there is more unaccounted money in the country,” he said. Names of those who declared unaccounted money under the scheme cannot be shared with any agency, as they have been granted immunity. Justice Shah said the SIT had come across several examples of companies indulging in malpractices like over-invoicing and under-invoicing for concealment.