ED, originally known as the Enforcement Unit, was set up under the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulations Act 1947(FERA 1947). It was later renamed as Enforcement Directorate in 1957. The ED is mandated with investigation into economic crimes and violation of foreign Exchange laws. ED is under the administrative control of the Department of Revenue, Ministry of Finance, Government of India.
The ED operates under Foreign Exchange Management Act, 1999 (FEMA) w.e.f. 1st June 2000. Further, in tune with the International Anti Money Laundering regime, the Prevention of Money Laundering Act, 2002 (PMLA) was enacted and ED was entrusted with its enforcement w.e.f. 1st July 2005. With the increase in the number of cases relating to economic offenders taking shelter in foreign countries, the Government has passed the Fugitive Economic Offenders Act, 2018 (FEOA) and ED is entrusted with its enforcement with effect from 21st April, 2018.
The statutory functions of the Directorate include enforcement of following Acts:
The Prevention of Money Laundering Act, 2002 (PMLA):
A criminal law aimed at preventing money laundering and confiscating property derived from criminal activities. The Enforcement Directorate (ED) enforces PMLA by investigating money-laundering offences, tracing and provisionally attaching proceeds of crime, and ensuring prosecution and confiscation through the Special Court.
The Foreign Exchange Management Act, 1999 (FEMA):
A civil law that regulates external trade, payments, and the orderly development of India's foreign exchange market. The Enforcement Directorate (ED) enforces FEMA by investigating suspected violations, and by adjudicating and imposing penalties for contraventions.
The Fugitive Economic Offenders Act, 2018 (FEOA):
A law to deter economic offenders who evade Indian law by staying outside the country. The ED is empowered to attach and confiscate properties of such fugitive economic offenders and transfer them to the Central Government.
The Foreign Exchange Regulation Act, 1973 (FERA):
Although repealed, the ED continues to adjudicate Show Cause Notices issued under FERA up to 31.05.2002 and pursue pending prosecutions for past contraventions.
Sponsoring Agency under COFEPOSA:
Under COFEPOSA, the ED acts as a sponsoring authority for preventive detention in cases involving serious contraventions of FEMA and related smuggling/foreign exchange violations.,
The Enforcement Case Information Report (ECIR)
The Enforcement Case Information Report (ECIR) is an internal document used by the ED to start a money-laundering investigation under the PMLA. It is similar in function to an FIR, but it has no statutory basis—the term ECIR is not used in the PMLA.
The ECIR acts as the starting point for all ED actions, including summons, searches, attachment of property, and arrests. ED registers an ECIR only after receiving information suggesting money laundering, usually based on a predicate offence like fraud, corruption, or narcotics. This information may come from police/CBI cases, complaints, or financial intelligence reports.
An ECIR can only exist if there is a scheduled (predicate) offence that generates “proceeds of crime.” Private individuals cannot file an ECIR; they can only give information to the ED, which may choose to convert it into an ECIR. Unlike an FIR, the ECIR is entirely internal, requires no magistrate's approval, and involves no judicial oversight. It can run parallel to the police FIR relating to the underlying offence.
Mr. Kapil Sibal, appearing in Vijay Madanlal Choudhary v. Union of India, argued that the ED's process for registering an ECIR is unclear, arbitrary, and violates the constitutional rights of the accused. He submitted that the PMLA procedure is harsh and goes against basic principles of criminal justice and the protections guaranteed under Articles 14, 20, and 21 of the Constitution. The ED can arrest a person based on an ECIR without even telling them what it contains. This, by itself, is arbitrary and violates the accused's constitutional rights. An accused has a right under Article 21 to know the allegations and to receive a copy of the FIR at an early stage, as held in Youth Bar Association of India v. Union of India.
It was argued that, under normal criminal procedure, investigating agencies must give the accused a list of all documents and materials seized, to ensure transparency. Under the Cr.P.C., every FIR registered under Section 154 crpc must also be sent to the Magistrate, but this is not followed in ECIR matters. There is also a violation of Section 157 Cr.P.C., resulting in non-compliance with the statutory procedure and the Supreme Court's settled law.
The ECIR creates an odd situation where the ED can call an accused for questioning and demand financial details, even though the accused is never told what the allegations are. When summoned under Section 50 of the PMLA, the accused must give statements that can later be used as evidence against him. Unlike the Cr.P.C., which clearly separates the procedure for summoning accused persons (Section 41A) and witnesses (Section 160), the PMLA makes no such distinction.
Another question that arises for discussion is whether ED officers are police officers or not? It has been argued that ED officers should be treated as “police officers” because this depends on two things: the purpose of the special law and the nature of the powers given to its officers. If a statute allows officers to take preventive and investigative steps to curb crime, and gives them coercive powers, then those officers function like police. In that case, Sections 25 and 26 of the Evidence Act would apply, making confessional statements inadmissible.
In State of Punjab v. Barkat Ram the Supreme Court, pointed out that the term “police officer” must be interpreted broadly, not narrowly. And that under the Police Act, 1861, even special police officers can be appointed, showing that formal enrolment is not essential—what matters is whether the officer has powers of crime prevention and detection.
It has also been argued that the PMLA is different from statutes like the Customs Act, Central Excise Act, and CGST Act, and that the dissent of Subba Rao, J. in Barkat Ram supports a wider interpretation. Since PMLA is a penal law, its purpose and the FATF recommendations must be examined to determine whether ED officers should be treated as police officers.
For this argument reliance was also placed on Raja Ram Jaiswal v. State of Bihar. Even in Tofan Singh v. State of Tamil Nadu, the Supreme Court relied on Raja Ram Jaiswal to hold that when an officer is given the power to investigate, prevent, and detect crime, he functions as a police officer and that Therefore, statements recorded under Section 50 of the PMLA—which are part of the investigation—should attract the bar under Section 25 of the Evidence Act.
Another point which is made is that, in many other statutes where officers were held not to be police officers, their role was described as conducting an “enquiry.” In contrast, the PMLA uses the term “investigation,” similar to the definition in Section 2(h) of the Cr.P.C., and Section 2(1)(na) of the PMLA mirrors this meaning. Hence, ED officers perform investigative functions like the police. It was also submitted that the ability to file a chargesheet is not the sole test to decide whether an officer is a “police officer” for the purposes of Section 25 of the Evidence Act.
The Supreme Court in Vijay Madanlal Choudhary v. Union of India held that officers under the PMLA are not “police officers.” This was a key finding that set ED officers apart from regular police. The Court reasoned that, unlike police who mainly investigate and prosecute crimes, ED officers also have a preventive role in stopping money laundering. Because of this functional difference, they form a distinct category. As a result, Statements recorded under Section 50 of the PMLA are admissible in evidence and do not violate Article 20(3). An ECIR is only an internal document of the ED, not an FIR, and does not have to be given to the accused. CrPC safeguards that apply to police investigations do not apply to ED proceedings. Section 45(1A) of the PMLA specifically prohibits police officers from investigating money-laundering offences, further confirming this distinction.
This decision was challenged in 2025 seeking review of it, by around eight petitions, including one by Lok Sabha MP Karti Chidambaram. A new three-judge bench of Justices Surya Kant, Ujjal Bhuyan, and Kostiswar Singh was formed to deal with the review petition. The controversy is yet to attain finality and is pending for adjudication in the Hon'ble Supreme Court of India. The outcome of the review proceedings is likely to have far-reaching implications for the enforcement architecture under the PMLA and the broader contours of criminal jurisprudence in India.
Authors Are Advocates Practising At Punjab &Haryana HighCourt
Views Are Personal