Fugitive Economic Offenders Act, 2018

• 09 Jul 2020

Why in News

Recently, assets worth Rs. 329.66 crore of the Punjab National Bank (PNB) fraud mastermind Nirav Modi have been confiscated under Section 12(2) and (8) of the Fugitive Economic Offenders Act, 2018.

• In this money laundering case, the Enforcement Directorate (ED) has so far attached properties valued at Rs. 2,348 crore.
• The properties were earlier attached under the Prevention of Money Laundering Act, (PMLA) 2002.
• To proactively detect such frauds, the Reserve Bank of India (RBI) is in the process of putting together an exclusive wing for banking fraud oversight.
  
  • This wing will have teams for meta-data processing and analysis, artificial intelligence analysis units, as well as proactive risk assessment cells.

Key Points

• Fugitive Economic Offenders Act, 2018: It seeks to confiscate properties of economic offenders who have left the country to avoid facing criminal prosecution or refuse to return to the country to face prosecution.
  
  • Fugitive economic offender:
    
    • A person against whom an arrest warrant has been issued for committing an offence listed in the Act and the value of the offence is at least Rs. 100 crore.
  • Some of the offences listed in the act are:
    
    • Counterfeiting government stamps or currency.
    • Cheque dishonour.
    • Money laundering.
    • Transactions defrauding creditors.
• Declaration of a Fugitive Economic Offender:
  
  • After hearing the application, a special court (designated under the PMLA, 2002) may declare an individual as a fugitive economic offender.
  • It may confiscate properties which are proceeds of crime, Benami properties and any other property, in India or abroad.
  • Upon confiscation, all rights and titles of the property will vest in the central government, free from encumbrances (such as any charges on the property).
  • The central government may appoint an administrator to manage and dispose of these properties.
• Bar on Filing or Defending Civil Claims:
  
  • The Act allows any civil court or tribunal to prohibit a declared fugitive economic offender, from filing or defending any civil claim.
  • Further, any company or limited liability partnership where such a person is a majority shareholder, promoter, or a key managerial person, may also be barred from filing or defending civil claims.
  • The authorities may provisionally attach properties of an accused, while the application is pending before the Special Court.
• Powers:
  
  • The authorities under the PMLA, 2002 will exercise powers given to them under the Fugitive Economic Offenders Act.
  • These powers will be similar to those of a civil court, including the search of persons in possession of records or proceeds of crime, the search of premises on the belief that a person is an FEO and seizure of documents.

Enforcement Directorate

• It is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance.
• On 1^st May 1956, an ‘Enforcement Unit’ was formed in the Department of Economic Affairs for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947. In 1957, it was renamed as ‘Enforcement Directorate’.
• ED enforces the following laws:
  
  • Foreign Exchange Management Act, 1999.
  • Prevention of Money Laundering Act, 2002.

Source: TH