FBI Reprioritisation and Its Ripple Effect on India: The Growing Imperative for Domestic Enforcement

Introduction

The global landscape of financial crime enforcement is undergoing a significant transformation. As the Federal Bureau of Investigation (FBI) continues its strategic shift toward counterterrorism and national security priorities, India finds itself at a critical juncture where cross-border fraud enforcement can no longer rely predominantly on international cooperation with American agencies. This reprioritisation, coupled with unprecedented growth in cybercrime losses, necessitates a comprehensive strengthening of India’s domestic regulatory and enforcement framework.

The FBI’s Strategic Evolution and Resource Constraints

The FBI’s transformation from a primarily law-enforcement agency to one focused on preventing terrorist attacks represents one of the most significant reorganizations in American law enforcement history. Following the September 11 attacks, the agency underwent systematic capability reprioritization, building counterterrorism capabilities alongside traditional law enforcement functions. This strategic renewal has inevitably affected resource allocation across all FBI operations, including international fraud investigations.

Recent data reveals the magnitude of challenges facing American agencies. In 2024, Americans reported losses exceeding $16 billion to cybercriminals and scammers, an increase of 33% from the previous year. Investment scams alone accounted for over six and a half billion dollars in losses, with cryptocurrency-related frauds comprising more than nine billion dollars of total losses. The FBI’s Internet Crime Complaint Centre received approximately 860,000 complaints, though the agency acknowledges that it has finite resources to address this avalanche of criminal activity.

This resource constraint has practical implications for international cooperation. While the FBI launched initiatives like Operation Level Up to focus on cryptocurrency investment fraud, these programs prioritize American victims. The agency’s Recovery Asset Team successfully froze substantial stolen funds in 2024, yet the sheer volume of cases necessitates prioritization based on jurisdictional and national security considerations.

India’s Escalating Challenge

India faces its own surge in cyber-enabled financial crimes. The country witnessed unprecedented growth in digital payment fraud throughout 2024, prompting urgent regulatory interventions. The convergence of India’s rapid digital transformation and sophisticated transnational criminal networks has created an environment where Indian victims increasingly fall prey to schemes orchestrated from foreign jurisdictions.

Indian regulatory authorities, including the Reserve Bank of India, Securities and Exchange Board of India, and the Enforcement Directorate, have responded with enhanced vigilance, releasing revised fraud risk management directions and strengthening anti-money laundering guidelines. The Indian Cybercrime Coordination Centre, established to enhance the nation’s fight against cyber-enabled financial crimes, has begun receiving data from various law enforcement agencies. The Citizen Financial Cyber Fraud Reporting and Management System enables immediate reporting of financial frauds, though effective prosecution still depends on successful international cooperation.

Legal Framework: Recent Developments

India’s legal framework for addressing cross-border financial crimes has evolved significantly through legislative changes and judicial interpretations.

The New Criminal Laws

On July 1, 2024, three new legislative acts came into force: the Bharatiya Nyaya Sanhita, Bharatiya Nagarik Suraksha Sanhita, and Bharatiya Sakshya Adhiniyam, replacing the Indian Penal Code, Code of Criminal Procedure, and Indian Evidence Act respectively. These laws mark the most significant reform in India’s criminal justice system, aiming to simplify enforcement processes and adopt a more victim-centric approach.

PMLA and Cross-Border Enforcement

The Prevention of Money Laundering Act, 2002, serves as India’s primary weapon against money laundering, including proceeds derived from foreign offenses. However, the Act’s application to cross-border crimes has generated considerable legal debate and litigation.

Landmark Case Law: Defining Cross-Border Jurisdiction

Adnan Nisar v. Directorate of Enforcement (2024)

The Delhi High Court’s September 2024 decision in Adnan Nisar v. Directorate of Enforcement represents a watershed moment in India’s approach to transnational financial crimes, involving three accused individuals implicated in cryptocurrency fraud following a complaint from a victim in the United States.

The victim reported that cryptocurrencies were fraudulently transferred from their hardware wallet in August 2022. Investigations traced these transactions to accounts maintained in India, uncovering a network of individuals involved in the fraud. Following a Mutual Legal Assistance Request from the U.S. Department of Justice detailing accusations of wire fraud and money laundering, the Enforcement Directorate commenced investigations under the PMLA.

The accused challenged their prosecution, arguing that the ED had overreached by initiating an investigation into an offense committed abroad, contending that prosecution under the PMLA requires a clear establishment of a scheduled offense within Indian jurisdiction.

The Delhi High Court delivered a nuanced ruling that expanded the scope of PMLA to offenses committed outside India while establishing critical procedural safeguards, holding that an offense committed under foreign law can be treated as a predicate offense under PMLA if it has cross-border implications and proceeds of crime have been transferred to India.

Critically, however, the Court also held that foreign laws cannot be judicially noticed and must be proved as facts through expert evidence during trial. At the bail stage, the Court found insufficient prima facie material to establish that the alleged U.S. offenses constituted scheduled offenses under PMLA, ultimately granting bail to the accused.

This decision establishes that while the ED possesses extraterritorial jurisdiction where offenses have cross-border implications, there must be a corresponding scheduled offense recognized under Indian law. The judgment creates a framework requiring preliminary evidentiary hearings to establish that foreign offenses correspond to Indian scheduled offenses before money laundering investigations can proceed to trial.[1]

Vijay Madanlal Choudhary v. Union of India (2022)

The Supreme Court’s comprehensive judgment in Vijay Madanlal Choudhary continues to provide the foundational framework for PMLA prosecutions. The Court upheld the constitutional validity of key PMLA provisions, while emphasizing that the commission of a scheduled offense is a sine qua non for a money laundering prosecution. This precedent continues to guide lower courts in evaluating cross-border money laundering cases.[2]

Implications for India’s Enforcement Architecture

The confluence of reduced FBI focus on international fraud, exploding cybercrime figures, and evolving jurisprudence necessitates strategic adaptations in India’s enforcement approach.

Strengthening Domestic Capacity

Indian agencies must develop enhanced capability to independently investigate and prosecute transnational fraud without primary reliance on foreign law enforcement. This requires investment in specialized training for officials in the CBI, ED, and cyber cells on cryptocurrency tracing, digital forensics, and preparation of evidence meeting international standards.

The RBI’s framework mandating two-factor authentication for all domestic digital payments from April 2026, and additional factor authentication for cross-border card transactions from October 2026, represents proactive regulatory intervention. However, technological safeguards must be complemented by enforcement capability.

Navigating Mutual Legal Assistance

India has signed Mutual Legal Assistance Treaties with forty countries, providing frameworks for cooperation in criminal matters. However, as the Adnan Nisar case demonstrates, MLAs must be accompanied by proper procedural safeguards and evidentiary standards. The Standing Committee on External Affairs has recommended that India identify countries that have become safe havens for economic offenders and prioritize signing extradition treaties with them.

Burden of Proof in Cross-Border Cases

The Adnan Nisar ruling establishes that Indian courts will not automatically accept foreign law as establishing scheduled offenses under PMLA. Enforcement agencies must now prepare to present expert evidence on foreign legal systems during proceedings. This requirement, while protecting the rights of accused persons, adds complexity and cost to prosecutions.

The judgment highlights a gap in PMLA’s legislative framework. Unlike the Extradition Act, 1962, which clearly defines extradition offenses and establishes procedures with reference to double criminality, the PMLA’s provisions on corresponding law lack detailed guidance on methods for proving foreign offenses.

Preventive Measures and Fast-Track Justice

The Fugitive Economic Offenders Act, 2018, which allows the confiscation of a fugitive’s assets even without conviction, serves as a deterrent to flight from India. However, as the Choksi case demonstrates, sophisticated offenders often secure foreign citizenship or residency before investigations commence, complicating enforcement.

Fast-track cyber courts and stronger enforcement by CERT-In, RBI, SEBI, and law enforcement agencies are essential for deterrence. The consolidation of enforcement data at the Indian Cybercrime Coordination Centre enables pattern recognition and coordinated responses but must be accompanied by judicial capacity to handle complex financial crime cases expeditiously.

Conclusion

The FBI’s reprioritisation toward counterterrorism and national security, combined with resource constraints amid record fraud losses, means India cannot depend primarily on American law enforcement for addressing crimes affecting Indian nationals. While the FBI continues international cooperation, particularly in cases involving significant American interests or transnational networks, the primary responsibility for protecting Indian citizens from cross-border fraud increasingly falls on domestic institutions.

Recent case law, particularly Adnan Nisar and the Mehul Choksi extradition proceedings, demonstrates both progress and challenges in India’s cross-border enforcement framework. The judiciary has affirmed the extraterritorial reach of Indian anti-money laundering laws while establishing procedural safeguards protecting fundamental rights. However, legislative gaps regarding proof of foreign law and resource constraints in enforcement agencies continue to pose obstacles.

India must continue strengthening bilateral legal cooperation through expanded extradition and MLAT networks, enhance the technical capabilities of enforcement personnel, develop fast-track judicial mechanisms for financial crimes, implement robust preventive regulations, and engage in diplomatic efforts to prevent economic offenders from finding safe havens. The convergence of reduced international law enforcement support and escalating cyber-enabled fraud makes this imperative not merely desirable but essential for protecting India’s financial system integrity and citizen welfare.

The ripple effect of FBI reprioritisation thus serves as both challenge and catalyst—challenging India to shoulder greater responsibility while catalyzing necessary reforms in its enforcement architecture. The nation’s response to this challenge will determine whether transnational financial criminals view India as a jurisdiction with effective deterrence or as one where limited enforcement creates impunity.

[1] 2024 SCC OnLine Del 6498

[2] 2022 SCC OnLine SC 929