INDIA Law and Practice Contributed by: Vijayendra Pratap Singh, Asif Ahmed, Bhanu Jindal and Khushi Mittal, AZB & Partners
ing such powers, the ED on several occasions has attached crypto-assets under the PMLA. 2.4 Use of Technology in Investigations Enforcement authorities in India, including the CBI, have begun using AI-powered technologies such as facial recognition systems, advanced image search tools, crime mapping, analytics and predictive system, Crime GPT (an AI tool for fighting crime adopted by Uttar Pradesh police), and human face detection to enhance investigations. The Indian Computer Emergency Response Team (CERT-In), which has been set up to enhance cyber security in India, is also in the process of adopting AI and blockchain-based technologies for cybersecurity audit tracking and monitoring. However, there are no specific laws or guidelines governing the use of AI by law enforcement in India. Further, there are no formal regulations governing the use of AI tools by companies in internal investigations. The legitimacy of such internal investigations would depend on compliance with related laws such as data protection laws, and applicable employment laws dealing with employee privacy and confidentiality. 2.5 Internal Investigations While there is a limited statutory mandate to conduct internal investigations under the Companies Act, there is no overarching requirement to do so. Further, any internal investigation does not bar enforcement authorities from conducting an investigation. Internal investigations are a good corporate govern - ance tool that may assist the company to subsequent - ly prove bona fide conduct during investigations or trials. If an internal report uncovers that an employee committed fraud without authority and beyond the company’s knowledge, the company may position itself as a witness or victim rather than an accused. Separately, directors’ fiduciary duties may compel them to initiate internal investigations and to make formal disclosures to authorities through a Director’s Responsibility Statement (DRS). In case of publicly listed companies, directors are also duty-bound to disclose fraudulent acts under listing regulations with
SEBI. For publicly listed companies, any forensic audit initiated by a regulator or otherwise must be manda - torily disclosed to the stock exchanges. While conducting internal investigations, companies should handle employee data in accordance with applicable data protection laws. Personal data that may identify an individual, and sensitive personal data such as passwords, financial information and biom - etrics, can be taken either with employee consent or for legitimate employment-related purposes, such as safeguarding against loss or liability and preventing corporate espionage. Internal investigations carried out by a company with the aid of an external legal counsel are protected by legal privilege under Section 132 of the BSA. There is, however, no statutory mandate under Indian law obligating a company to voluntarily share findings of a legally privileged internal investigation with enforce - After an investigation is completed, the BNSS man - dates police officials, the CBI, and the EOW to file a report with the jurisdictional court. If the court is satisfied that an offence has been established and sufficient evidence exists to prosecute the accused, the court can take cognisance of the offence and commence trial. SFIO The SFIO has to prepare an investigation report/com - plaint, which must be filed with the central govern - ment for approval to initiate prosecution. After this, the report is presented to a special court operating in accordance with the BNSS. IT authorities Pursuant to a search and seizure or audit of the books of accounts of a company/individual, the IT authorities must prepare a report and assess the amount of tax evaded by the accused. A notice of demand of such tax is then issued to the relevant individual, who can either pay the amount or challenge the assessment before the IT authorities/tribunal. ment authorities. 2.6 Prosecution Prosecuting Authorities Police/CBI/EOW
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