The Telegraph
Since 1st March, 1999
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Dirty tricks stall money-launderer buster

New Delhi, March 30: Law books on the Prevention of Money Laundering Act, 2002, are out in the market. But there is no investigating agency empowered to handle such cases.

It has been a year since the Act was passed by Parliament. But the finance ministry is yet to establish the directorate for preventing money laundering.

The agencies tasked to investigate financial crimes are fighting among themselves to grab power to prevent legitimisation of the money earned through illegal and criminal activities.

The agencies trying to upstage each other are the Enforcement Directorate, which investigates cases involving foreign exchange violation, the Central Economic Intelligence Bureau and the income-tax department.

The reason why they are trying to steal a march over each other is that it would give them immense clout and power to deal with large transactions of illegal movable and immovable money, government sources said.

The Enforcement Directorate claims it has the expertise to investigate large-scale movement of illegal money, as it has been doing under the Foreign Exchange Regulation Act (Fera) regime and now under its much softer version, the Foreign Exchange Management Act (Fema), the sources said.

The economic intelligence bureau believes it can handle these cases better. The bureau says it has been providing intelligence on financial frauds and that it has a pool of officers drawn from customs, the income-tax department and the Enforcement Directorate.

The income-tax department’s claim is that it had drafted the money laundering Bill and knows the nuances of handling such matters.

Sources said the Union finance ministry has had various meetings to thrash out the issue, but nothing has happened so far.

The last meeting, too, held on February 26 and presided over by revenue secretary S. Naryanan, failed to reach a consensus.

The tax department is expected to give a presentation soon on the finer points of investigating money-laundering cases.

According to finance ministry sources, the Enforcement Directorate might not be a gainer in this race because of its “misdeeds” that had come to light when investigations were being conducted into Fera cases during the “sunset” period, which ended in early 2002.

Allegations of impropriety and corruption were levelled against the directorate, which had to adjudicate more than 10,000 cases of Fera violations during the sunset period — a time frame given to the directorate to complete such cases before the stringent Act was replaced by Fema.

Parliament had passed the Money Laundering Bill in 2002 after nearly four years of its introduction in the Lok Sabha.

Members from various parties had objected to various portions of the Bill, following which it was referred to the Standing Committee on Finance, which presented its report on March 4, 1999. The Bill again faced resistance from some MPs but was ultimately passed after somemodifications were made.

The Bill was conceived from the initiatives that international communities like the United Nations and western countries have taken to prevent laundering of proceeds of crimes, be it from drug trafficking, underworld activities or terrorism-related cases.

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