Finance Minister P. Chidambaram, on Wednesday, asked the Enforcement Directorate (ED) to be selective in probing money laundering activities and focus on significant cases so as not to hurt the process of legitimate investments.
Addressing ED officials at a function here in which a number of officers and staff members of the Directorate were awarded for meritorious services, Mr. Chidambaram said: “We must remember that economic activity must not be hindered by mindless investigation and prosecutions... All legitimate trading and investment activity must be fully respected and protected, even while we investigate crimes involving money and laundering of money…’’
“Otherwise, we will be overwhelmed with cases that we would be required to prosecute,” the Finance Minister explained while underscoring the need for exercising caution in selecting the cases that should be taken up for prosecution under the provisions of the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA).
Illustrating further on the issue, Mr. Chidambaram said: “What drives the economy is trade and investments, especially foreign trade. Investments can flow both ways...We must facilitate foreign trade. We must facilitate investments…”
At the same time, however, since money laundering is related to specific crimes such as human and drug trafficking as well as terror financing, the Finance Minister sought greater international cooperation for dealing with the menace. “It is important that agencies across the world cooperate, share technology, share information and chase the offenders,” he said.
On the provisions of the PMLA, Mr. Chidambaram pointed out that the legislation rested on the principle of a predicate crime in which there is an offence which has anything that has to do with proceeds of the crime.
“Even if you are acquitted in the trial of a predicate crime, it is possible that you could be convicted of an offence under money laundering,” he said while cautioning alongside that even as theft, breach of trust, misappropriation and cheating could throw up cases of money laundering, the ED “must carefully select the cases for prosecution”.
Mr. Chidambaram also noted that there was need for strengthening the ED and filling up the positions lying vacant for a long period. “I would like to appeal to the CVC, UPSC and Department of Personnel and Training (DoPT) to please understand the gravity of situation arising out of these vacancies and work harder and quicker to ensure that these vacancies are filled,” he said.