Money Laundering and Associated Concepts 

Context: About 700 entities that had taken the assistance of a hawala racket allegedly operated by Naresh Jain and his associates are under the Enforcement Directorate’s (ED) scanner for suspected laundering of undisclosed income running into thousands of crores. 

  • The entities allegedly paid commissions to the syndicate to rotate funds and also send the money overseas using hundreds of shell companies.


  • Directorate of Enforcement is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance (Department of Investment and Public Asset Management; Expenditure; Revenue; Financial Services; Economic Affairs are other departments of the Ministry).
  • It enforces the following laws: – 
    Foreign Exchange Management Act, 1999 (FEMA) – A Civil Law.
    Prevention of Money Laundering Act, 2002 (PMLA) – A Criminal Law. 

A brief analysis of other major agencies of the central government:

  • The Intelligence Bureau (IB) is India’s internal intelligence agency. It is under the Ministry of Home Affairs. 
  • Directorate of Enforcement is a specialized financial investigation agency under the Department of Revenue, Ministry of Finance. 
  • The Directorate of Revenue Intelligence is the apex intelligence and investigative agency for matters relating to violation of the Customs Act. It is under the Ministry of Finance. 
  • The Central Board of Direct Taxes (CBDT) is a part of Department of Revenue in the Ministry of Finance.
  • National Investigation Agency (NIA) is a central agency established by the Indian Government to combat terror in India. It is under the Ministry of Home Affairs.
  • The Central Bureau of Investigation (CBI) is the premier investigating agency of India operating under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions. 
  • All appointments in the CBI above the rank of Superintendent of Police are approved by a five-member committee chaired by the CVC and including two vigilance commissioners and secretaries of the Home Ministry and the Department of Personnel and Training. 
  • The CBI chief is an invitee to the committee and has to be consulted.

Research and Analysis Wing (RAW) 

  • Established to satisfy the need for increased intelligence that was identified during the 1962 Sino-Indian Border War and during the Indo-Pakistani War of 1965, India’s Research and Analysis Wing (RAW) was created in 1968 to handle India’s external intelligence affairs.
  • Currently, RAW operates under the Prime Minister’s Office, and was intentionally established as a “wing” versus an “agency” in order to bypass agency reporting requirements to Parliament’s Right to Information Act. 
  • In 1968, Prime Minister Indira Gandhi appointed R. N. Kao as the first director of RAW.

Attached Bodies or Autonomous Bodies

  • Aerial Reconnaissance Centre
  • The ARC is responsible for collection of high quality overhead imagery of activities and installations in neighboring countries.
  • Special Frontier Force
  • A paramilitary force in India, the Special Frontier Force is headed by the inspector general who reports to the director general of security for RAW. 
  • National Technical Facilities Organization/National Technical Research Organization
  • The function of the NTRO is suspected to be technological espionage. There are also indicators to suggest they perform imagery and communications analysis via varying platforms.


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