Module: | MODULE A: INTERNATIONAL BANKING
Q191: Consider the following statements regarding the role of the Directorate of Enforcement in India:
1. The Directorate of Enforcement is the primary law enforcement agency responsible for investigating violations under the Foreign Exchange Management Act.
2. Officers of the Directorate of Enforcement are granted powers to search premises and seize documents during their investigations into suspected contraventions.
3. The Directorate of Enforcement operates under the direct administrative and operational control of the Reserve Bank of India.
Which of the statements given above is or are INCORRECT?
2. Officers of the Directorate of Enforcement are granted powers to search premises and seize documents during their investigations into suspected contraventions.
3. The Directorate of Enforcement operates under the direct administrative and operational control of the Reserve Bank of India.
Which of the statements given above is or are INCORRECT?
✅ Correct Answer: C
🎯 Quick Answer:
Option C is correct because only statement 3 is incorrect.Structural Breakdown: Under the Act, the Directorate serves as the investigative arm.
Its officers possess extensive civil enforcement powers, including the authority to summon individuals, search corporate premises, and seize digital and physical evidence related to foreign exchange fraud.
Statement 3 is factually incorrect because the Directorate of Enforcement is not a department of the Reserve Bank of India; it functions under the Department of Revenue within the Ministry of Finance, Government of India.
Historical Context: The Directorate was originally formed in 1956 specifically to handle exchange control law violations.
Its role expanded significantly over the decades to also enforce the Prevention of Money Laundering Act.
Causal Reasoning: The causal logic for keeping the investigative agency separate from the central bank is the separation of powers.
The Reserve Bank of India acts as the policy maker and regulator, while the Directorate of Enforcement acts as the independent police force, preventing conflicts of interest and ensuring impartial investigations.