Probe Into Finances Of ‘Freedom 251’

• Enforcement Directorate has started a probe into the finances of Ringing Bells, makers of the world’s cheapest smartphone Freedom 251, as questions continue to be raised on the feasibility of offering a handset at Rs 251.
• ED is looking into financial details and bank accounts of the company and its promoters.
• The Noida-based phone-makers have also come under the scanner of the IT Department which is looking into its financial structure and has obtained documents, including those from the Registrar of Companies (RoC), in this regard.

About Enforcement Directorate

Enforcement Directorate, established in the year 1956, is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It functions under the overall aegis of the Department of Revenue, Ministry of Finance, Government of India. It is responsible for enforcing Foreign Exchange Management Act,1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).

About Foreign Exchange Management Act,1999 (FEMA)

The Foreign Exchange Management Act (FEMA) was an act passed in 1999, which replaced Foreign Exchange Regulation Act. This act seeks to make offences related to foreign exchange civil offences. It extends to the whole of India.
Highlights:

• It is consistent with full current account convertibility and contains provisions for progressive liberalisation of capital account transactions.
• It is transparent in its application as it lays down the areas requiring specific permissions of the Reserve Bank/Government of India on acquisition/holding of foreign exchange.
• It classified the foreign exchange transactions in two categories, viz. capital account and current account transactions.
• It provides power to the Reserve Bank for specifying, in , consultation with the central government, the classes of capital account transactions and limits to which exchange is admissible for such transactions.
• It gives full freedom to a person resident in India, who was earlier resident outside India, to hold/own/transfer any foreign security/immovable property situated outside India and acquired when s/he was resident.
• This act is a civil law and the contraventions of the Act provide for arrest only in exceptional cases.
• FEMA does not apply to Indian citizen’s resident outside India.

About Prevention of Money Laundering Act, 2002 (PMLA)

• The Prevention of Money Laundering Act (PMLA), 2002 was enacted in January, 2003.
• The Act have come into force with effect from 1st July, 2005.
• Sec. 3 of PMLA defines offence of money laundering as whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
• It prescribes obligation of banking companies, financial institutions and intermediaries for verification and maintenance of records of the identity of all its clients and also of all transactions and for furnishing information of such transactions in prescribed form to the Financial Intelligence Unit-India (FIU-IND). It empowers the Director of FIU-IND to impose fine on banking company, financial institution or intermediary if they or any of its officers fails to comply with the provisions of the Act as indicated above.
• PMLA empowers certain officers of the Directorate of Enforcement to carry out investigations in cases involving offence of money laundering and also to attach the property involved in money laundering. PMLA envisages setting up of an Adjudicating Authority to exercise jurisdiction, power and authority conferred by it essentially to confirm attachment or order confiscation of attached properties.
• It also envisages setting up of an Appellate Tribunal to hear appeals against the order of the Adjudicating Authority and the authorities like Director FIU-IND.
• PMLA envisages designation of one or more courts of sessions as Special Court or Special Courts to try the offences punishable under PMLA and offences with which the accused may, under the Code of Criminal Procedure 1973, be charged at the same trial. PMLA allows Central Government to enter into an agreement with Government of any country outside India for enforcing the provisions of the PMLA, exchange of information for the prevention of any offence under PMLA or under the corresponding law in force in that country or investigation of cases relating to any offence under PMLA

By: Vishal