Most cash seizures are for failure to report cash to Customs when traveling internationally with more than $10,000 (“failure to report”). The law that requires the report is 31 USC § 5316, and requires that any person traveling internationally give Customs a FinCen 105 form/report at or before the time of arrival or departure if they are transporting more than USD $10,000 or its equivalent. The law was intended to give the government tools to more easily detect and seize money from illegal sources or for illegal uses, such as drug dealing, money laundering, tax evasion, and other crimes. Failure to report cash is a serious violation of the law.
Cash reporting form Fincen 105
The FinCen 105 cash reporting form must accurately report the total value of the monetary instruments being transported and be filed timely. Failure to report the following monetary instruments is a violation:
- United States coins and currency;
- Coins and currency of a foreign country;
- Travelers’ checks in any form;
- Bearer negotiable instruments (including personal checks, business checks, official bank checks, cashier’s checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery;
- Incomplete instruments (including personal checks, business checks, official bank checks, cashier’s checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) signed but with the payee’s name omitted; and
- Bearer investment securities, bearer securities, stock on which title is passed on delivery, and “similar material”; and
If the cash reporting form is inaccurate, or not made at all, Customs can seize the cash and forfeit all the money. To enforce this $10,000 or more cash and its equivalent reporting requirement Customs “may stop and search, at the border and without a search warrant, any vehicle, vessel, aircraft, or other conveyance, any envelope or other container, and any person entering or departing from the United States.”
Stops and search for cash by Customs
These stops and searches for cash by Customs usually start by questioning a traveler at their gate before their flight leaves, after arriving at the airport and going through passport control or the customs inspection, or when driving into or out of Canada or Mexico. People can be targeted for a stop and search for cash by Customs because of ethnicity, length of stay, or itinerary.
For most people, the experience of the stop and search for cash by Customs is traumatic. In a matter of minutes they lose a lot of money via seizure, are detained and interrogated, asked questions about their finances, the source of the seized money they failed to report, its use, and their travels. The interrogation often involves the threat of arrest of the violator or a family member. Often, attempts to amend the cash declaration are refused.
Myths about what the cash reporting requirement means
People have many wrong ideas what the cash reporting requirement means and this misinformation is a reason why many people get their currency seized by customs for a failure to report. Some common myths are:
- The money is taxed if it is reported;
- Only cash needs to be reported;
- Only the amount of cash over $10,000 needs to be reported;
- If more than 1 person travels together, each can carry $10,000 or less;
- Foreign currency does not count toward the cash reporting requirement;
- Customs will steal reported cash, or demand a bribe;
Other times people violate the cash reporting requirement because they do not speak or read English, miscount the money, forgot about money in their bag from a previous trip, receive it as a gift of unknown amount, miscount it, do not want others to overhear in case they try to rob them, do not want to tell their spouse (or have been fighting or not sharing financial information with their spouse), are in a hurry, got panicked when they were questioned, or are ignorant of the reporting requirement.
Unfortunately, ignorance of the cash reporting requirement is no excuse, even though ignorance of the cash reporting requirement is hard for anyone to prove. Customs declaration forms and airports are usually filled with notices about the reporting requirement that are visible, even if they are never read or understood. And although the law says the failure to report must be done knowingly, this is widely interpreted to require only that there is a knowing transportation of more than $10,000, not a knowing violation of the law.
What are the civil or criminal penalties for failing to report cash?
There are both civil and criminal penalties for failing to report cash violations, but not everyone is charged criminally. Your unreported cash can be seized & forfeited (lost), and you can be civilly fined without ever being found guilty of the crime of failing to report.
The civil penalties of a failure to report are forfeiture of the money and a possible money penalty not “more than the amount of the monetary instrument for which the report was required.” In addition to the criminal penalties for a failure to report cash violation, there are also civil penalties. The amount of the civil penalty will not be greater than the amount involved in the transaction, and that amount shall be reduced by the amount of any money forfeited. In addition, the violator will probably experience searches, detentions, questioning, and possible seizures when traveling internationally in the future. This is because a record will be generated in the databases used by Homeland Security and U.S. Customs & Border Protection for assessing international travelers.
The criminal consequences of failing to report cash are severe. Failing to make a report or making an inaccurate report by omitting or misstating a material fact in a report includes not only forfeiture of the money, but a fine ranging from $250,000 to $500,000 and jail time from 5 to 10 years.
What is the civil and criminal statute of limitations for a failure to report cash?
The criminal statute of limitations for a failure to report cash is 5 years from the date of the violation. If you are not arrested at the time the money was seized by CBP and the U.S. Attorney was notified and declined to prosecute you, you probably will not face criminal charges unless customs uncovers additional evidence that the money is derived from illegal sources or had an illegal intended use.
The civil statute of limitations for a failure to report cash is 6 years from the date of the failure to report transportation of currency violation. If a civil money penalty is assessed is not paid, the government has 2 years from the date the civil money penalty was assessed or the date the judgment in a related criminal action becomes final, whichever is later.
There are also other violations which derive from the failure to report, such as structuring and bulk cash smuggling.