Plan of Action after Receiving an ED Notice

Grounds for issuance of notice by ED

• Suspicion of money laundering: Under the PMLA, the ED investigates individuals and businesses suspected of dealing with funds from illegitimate sources. ED may issue notice against the proceeds of crime derived from the offences scheduled under the PMLA.

• Alleged foreign exchange violations: If a person has committed a violation under FEMA and dealt with foreign exchange without proper authorization, then he may receive an ED notice.

• Unauthorised International remittances: Any foreign remittances carried out contrary to the laws of foreign exchange in India or disallowing the foreign investment regulations may also become a reason for receiving ED notice.

• Suspected involvement in financial crimes: If a person has facilitated transactions connected to illegal activities such as drug trafficking, organized crime, or corruption, then he may receive an ED notice.

• Connections to suspicious financial networks: If a person has indirect involvement or nexus with a suspicious financial transaction which is already subjected to investigation, then to understand the gravity of involvement the ED may issue notice to all the persons even if they have a minuscule connection with the financial transaction under investigation.

Pre-Investigation Stage

Issuance of summon by ED for document submission

• Bank statements: Depending upon the nature of the investigation, ED may demand the bank statements whether personal or corporate.

• Property and investment details: ED may demand submission of documents of properties and/or investments owned by the receiver of the notice and his family.

• Tax returns: ED may ask for tax returns whether income tax returns or the goods and service tax (GST) returns.

• Corporate financial records: Financial records including balance sheets, profit and loss accounts, trial balance, etc may be demanded by the ED and various other corporate financial records.

• Foreign exchange transaction details: ED may on the basis of the nature of the case may ask details of the remittances, repatriation or any cross border foreign exchange dealings.

Response to the Summon:

Appearance Before ED Authorities

Initiation of investigation or inquiry by ED

• Summoning for further documents and witnesses: In case the ED belief that any additional information or documents are required they may summon anyone holding such information/ document.

• Searching place, property, vehicle or person: The ED has power to search any place, property, or vehicle, break any safe or locker of the accused in order to carry out investigation or inquiry if they believe that carrying out such investigation will give him an opportunity to look into the requisite records that might aid in determining whether an illegal activity was conducted or not. Further, if ED have sufficient reasons to believe the involvement of any person in the alleged crime, they have power to search such person.

• Seizure and confiscation of properties and assets: The ED is bestowed with the power under PMLA and FEMA to provisionally seize or confiscate any property if they have sufficient reasons to believe the involvement of the property in the money laundering or other financial crimes.

• Tracing the money flow and interconnected transactions: The ED is empowered to freeze the bank accounts and finally related documents so that it can trace the money flow and interconnected transactions.

Attachment of Property

Arrest of a person

Conclusion