Adjudication Procedure Under FEMA

FEMA, or the foreign exchange law of India, regulates the flow of foreign exchange to and from India. In case the provisions of the law are contravened, penalty is leviable under FEMA and the levy is done through a formal adjudication process.

The adjudication under the Foreign Exchange Management Act, 1999 ('FEMA') is conducted by the Directorate of Enforcement (more commonly called the Enforcement Directorate ('ED')). At the very outset, it is important to keep in mind that ED is tasked with enforcing two laws in India. First is the money laundering law under the Prevention of Money Laundering Act, 2002 ('PMLA') which is a criminal statute. Second is the foreign exchange law under the FEMA which is primarily civil in nature.