Foreign travelers who are used to conducting business with cash are rarely surprised of the rules governing arrival to the U.S. from abroad. Infrequent travelers, on the other hand, are often not as aware of the basic requirement when entering a U.S. port:

YOU ARE REQUIRED TO DECLARE IF YOU ARE BRINGING
INTO THE U.S. $10,000 OR MORE IN MONETARY INSTRUMENTS.

A brief note on the terms used above:

1. By “declaring,” we refer to disclosing monetary instruments to the federal agency charged with facilitating lawful international travel and trade, U.S. Customs and Border Protection (CBP).

2. By “U.S. port,” we refer to any authorized point of entry into the United States, whether it is land, air, or sea.

3. By “$10,000,” we refer to ten thousand U.S. dollars.

4. And by “monetary instruments,” we refer to any and all foreign or domestic currency or coin; stocks and bonds (in bearer form); and travelers or personal checks. (Note that credit cards with lines of credit at or exceeding $10,000 are not subject to reporting.)

While the declaration requirement may be news to some, experienced travelers are by and large cognizant of the rule—and, somewhat ironically, may therefore be more likely not to disclose the quantity of financial instruments they’re entering the U.S. with., on the grounds that it is a burdensome requirement.

In this article, we review the reasons behind the financial declaration requirement; streamline the process of declaring so as to avoid problems; and describe the process for recouping money confiscated by the CBP. 

Rationale

The law requiring a declaration dates back nearly 50 years, when the Bank Secrecy Act, as codified in 31 U.S.C. 5311, was first passed.

The requirement is rooted in a legitimate goal of the U.S. government, which is naturally concerned with the trafficking and use—or misuse—of funds arising from money laundering, tax evasion, drug transactions, and terrorism. Tracking the flow of currency is essential to combating such illegal activities.

Carrying $10,000 or more in currency is not illegal or necessarily problematic. But as with many well-intentioned laws, enforcement of the declaration requirement can be flawed. The requirement frequently ensnares innocent travelers—and for pretty innocuous reasons at that. Travelers often bring large sums of cash into the United States in order to conduct mundane activities, including, for example, shopping, gambling at casinos (where such is permitted), completing business transactions, converting their currency into USD for tourism purposes, or paying bills. This last example is one that occurs often: international exchange students bringing in checks from their parents that they plan to cash at a U.S. bank account to pay for their school tuition or rent. Since “monetary instruments” comprise both currencies and checks, such travelers can unwittingly cause themselves trouble.

Avoiding Violations

Failure to comply with the declaration requirement is costly. CBP has the power to confiscate undeclared funds in full if discovered. Practically speaking, the chances of being discovered are relatively high, while the cost of compliance is extremely low.

In fact, compliance is simple. On CBP’s Customs Form 6059B, also known as the “Customs Declaration Form” that all international travelers must submit, simply check “Yes” on Question 13, which states: “I am (We are) carrying currency or monetary instruments over $10,000 U.S. or foreign equivalent.” Then, itemize the monetary instruments where indicated at the bottom of the back of the form. Travelers declaring $10,000 or more are additionally required to complete a form for the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN): FinCEN Form 105, Report of International Transportation of Currency or Monetary Instruments. FinCEN Form 105 basically asks for more details on the monetary instruments being brought into the U.S., as well as for and by whom the instruments are being transported.

When completing Customs Form 6059B and particularly FinCEN Form 105, travelers must take pains to ensure that all the monetary instruments they are traveling with are accounted for. If a traveler declares only a portion, whether by mistake or on purpose, all of the monetary instruments he or she is traveling with are still subject to seizure and forfeiture. (That said, in practice, if the amount declared on FinCEN Form 105 differs from the actual amount by five percent or less, CBP officers usually allow a “violator” to amend his or her report. No traveler should rely on this discretionary allowance, however.)

My money was confiscated. Now what?

If travelers fail to declare that they have $10,000 or more in monetary instruments, CBP may seize the monetary instruments in their entirety—or not. What an individual officer chooses to do is up to him or her, but CBP does provide some general guidance on what officers should do.

“Small” Amounts

If the following conditions apply to your confiscated monetary instruments:

1. The amount transported is $25,000 or less; and

2. There is no evidence that the funds have a connection (referred to as a “nexus”) to illegal activity; and

3. The traveler can show that the funds come from a legitimate source and have a legitimate intended use

Then upon payment of a fine (referred to as “mitigation”), the funds can be remitted on-site to the traveler.

Fine Schedule

CBP provides for the return of confiscated monetary instruments upon receipt of a fine. Fines are assessed according to the amount transported.

 

Amount Confiscated	Standard Fine
$15,000 or less	$500
$15,001 to $25,000	$1,000
$25,001 to $40,000	$2,500
$40,001 to $70,000	$5,000
$70,001 to $120,000	$10,000
$120,001 to $200,000	$20,000
$200,001 to $500,000	$30,000
$500,001 to $1,000,000	$50,000
More than $1,000,000	Decided according to CBP and Treasury Department personnel and policy

As noted in the table above, the fine for undeclared amounts less than $15,000 is $500, while the fine is doubled to $1,000 for amounts between $15,001 and $25,000.

In addition to a fine, the violating traveler will have to sign a “hold harmless” agreement, which basically stipulates that the traveler will not to sue the government in exchange for resolving the issue and receiving the seized monetary instruments immediately. Further, the violator will be responsible for covering the costs incurred by CBP in seizing and storing the monetary instruments.

Discretionary Reductions
A CBP officer has the discretion to reduce the fine by up to 30 percent, provided there are “mitigating factors.” Basic mitigating factors include the following:

1. Language barrier, physical ailment, or mental condition that inhibits a traveler’s understanding of the declaration requirement

2. Inexperience in international travel

3. Cooperation with CBP officers after discovery of the violation beyond that which would be normally expected

Each factor is worth a 10-percent reduction, so all three factors are needed if the fine is to be reduced by 30 percent in total.

A CBP officer has the authority to reduce the fine by more than 30 percent, including up to waiving the entire fine, if there are “extraordinary” mitigating factors. These include:

1. CBP error

2. Voluntary return to Customs and self-reporting of a failure to declare

3. Special humanitarian factors

“Large” Amounts

It’s often the case for more sizeable undeclared amounts, or otherwise at CBP’s discretion, that violators will be issued a “notice of seizure” after confiscation. This notice entails a process whereby CBP refers the incident to a U.S. Attorney and the U.S. Department of Homeland Security’s (DHS) Office of Investigations before making a decision about what to do with the money. In many cases, the end result is a Civil Asset Forfeiture Reform Act (CAFRA) seizure under 31 U.S.C. 5316 and 5317. To boil it down simply: the difference between a CAFRA seizure and a non-CAFRA seizure is that non-CAFRA seizure only involves Customs, while CAFRA seizures involve other federal agencies.

Under CAFRA, a notice of seizure must be sent to the violator within 60 days of the date of seizure. A violator then has only a short period of time to challenge the government’s seizure of his or her monetary instruments: no later than 35 days after the date the notice was mailed, or no later than 30 days after the date of final publication of a notice of seizure. “Date of final publication” refers to the document the government publishes periodically listing all of its pending seizure notifications. Pending seizures are published online at www.forfeiture.gov.

Challenging a Seizure

If a violator wishes to challenge the seizure, then it is imperative that he or she keeps detailed notes about the following:

1. When the seizure happened

2. How much and what was seized

3. Where the seizure took place (i.e. port of entry)

Recalling where the incident occurred seems obvious, but because there are incidents where a notice of seizure is never received—e.g., it is mailed to a foreign country—this advice is worth repeating. In such cases, finding the incident online is the quickest way to challenge the forfeiture.

To successfully challenge a pending seizure, a violator must demonstrate two things:

1. The seized monetary instruments came from a “legitimate source.”

   -In other words, seized funds did not originate from a crime like a drug transaction, but rather came from a “legitimate source” like a parent’s salary.

2. The seized monetary instruments were intended for a legitimate, lawful purpose.

   -For example, the funds were to be used to pay for school tuition.

Upon receipt of the claim, CBP may offer the settle a case and return a portion of the money. Alternatively, if the government believes the funds were related to a criminal or nefarious activity, CBP may choose to challenge the attempt to recover the funds.

For more detailed information on fines, other penalties, and forfeitures, refer to CBP’s guidelines publication here, which was also a source consulted in writing this article.

Our Firm is Here to Help

Preparing the documentation needed to successfully challenge a forfeiture action can be extremely challenging and time-consuming, even for a native English speaker. Consulting experienced attorneys can make all the difference between the government retaining or returning your seized monetary instruments.

This article served to provide a brief overview on the basics of financial compliance with the declaration requirement. But the content included here cannot substitute for guidance about your specific situation. We strongly advise consulting with a financial planner and an experienced attorney. To take advantage of a free consultation on your potential case, click here to contact Zhang & Associates today.

Created 07/28/2017

For more information on Financial Regulations Compliance, refer to the articles below:

• Declaring How Much Money You Have at the Airport: Confiscation of Financial Instruments by Customs and Border Protection
• Complying with Personal Financial Regulations: Overview for U.S. Citizens, Permanent Residents, Resident Aliens, and Nonresident Aliens with U.S. Source Income or Assets