Tag: china

Two red envelopes with Chinese characters on them and stuffed with U.S. dollars.

Why some Chinese travel with cash leading to airport seizures

Posted by Jason P. Wapiennik on

One question I face from most Americans when I tell them that our customs law firm helps people recover from money after customs money seizure is, “Why would anyone travel with all that money?”

Two red envelopes (hongbao) with Chinese characters on them and stuffed with U.S. dollars.
Some Chinese bring money in red envelopes (hongbao) for the Chinese new year celebration to give to family

It’s a good question.The answer? Many foreign governments, China in particular, restrict the amount and method that its citizens can take from the country via capital-controls; when the economy tanks or the currency is devalued, it increases the desire to move the money into another country before the market gets worse.

A few years ago the Wall Street Journal did a story about rich Chinese trying to get their money out of China, in the form of cash, that illustrates this point. The story is Chinese Fly Cash West, by the Suitcase and it provides some insight into why people travel with Cash from China, and why Customs seizes this money from them at airports:

China restricts private citizens from taking out more than $50,000 per individual per year. While it is hard to enforce these restrictions, Chinese authorities are scrutinizing outgoing private cash amid a broad anticorruption drive and as worry grows over the risks of capital flight.

The money seized at airports represents just a sliver of private Chinese money pouring out, but highlights that Chinese citizens are turning to one of the oldest and simplest methods to evade those controls: taking cash out in a suitcase.

The articles goes on to say:

From 2009 to 2011, U.S. airport customs officers seized over $5 million in undeclared cash from Chinese citizens, according to U.S. Customs and Border Protection. That is 8.4% of the total seized and more than double the nearest amount for another nationality.

Transporting large amounts of cash isn’t necessarily illegal. Travelers must declare cash over $10,000 when they land in Canada or the U.S. Most undeclared cash is temporarily seized and subject to fines. If customs agents believe the cash comes from illegal activities, the onus is on the traveler to prove otherwise before it is returned.

I would correct this final paragraph with a few legal subtleties. If any amount of money is undeclared to customs, all of the money transported may be seized and, if legitimate source and use are not proven to Customs, will be forfeited forever (i.e., lost). This burden is on the traveler whether or not Customs believe the cash comes from illegal activities. It must always be proven.

Moving cash from China subjects a person to fines in China:

In China, violators of Beijing’s rules on moving out cash are also subject to fines. From 2007 to 2011, China’s State Administration of Foreign Exchange levied such fines totaling 1.27 billion yuan ($202 million), according to the most recent data available.

The story goes on to state that seizures from 2009 to 2011 dramatically increased at airports in Los Angeles, Chicago, Detroit, Houston and San Francisco for money seized by Customs from Chinese nationals. But the numbers seized by U.S. Customs were smaller than that seized by Canadian customs. Apparently because property rules rules and investor visas are easier to obtain.

The New York Times also published a story we tweeted about:

I’m sure the cash is flooding the U.S. market now for the same reasons. Customs will seize unreported money from any Chinese traveler or immigrant at any U.S. airport if they catch them.

CBP Fines Agricultural Products Smugglers $98,000

Posted by Jason P. Wapiennik on

When you heard that someone is a smuggler, or that they’ve smuggled something you typically think of smuggling drugs or other nefarious types of products. Most people don’t realize smuggling is essentially just another word for concealing. Concealing can be accomplished by outfitting a vehicle or container to hide products, by hiding illicit product with legitimate products in the same shipment, or by falsely declaring the contents of a shipment on an invoice or manifest.

In the story we quote below, the “shippers and freight forwarders employ[ed] fictitious shipper names and addresses, and provide[d] unrelated cargo descriptions” in an effort to smuggleĀ the goods into the country. The goods were prohibited agricultural goods that contained unsafe foods or a risk of harboring invasive insect species. CBP takes this very seriously in the wake of the destructive effects posed by species that arrived in the United States via importation, like the Emerald ash borderĀ (see our article onĀ Regulated Wood Packaging Violations)

In the story, U.S. Customs & Border Protection Agriculture Specialists conducted a special operation to “interrupt an extensive network of purposely mislabeled and high risk agriculture products coming from Hong Kong, China, India, and Saudi Arabia that were “en route to various locations throughout the United States, including ethnic restaurants, food stores, and private residences.”

From the story, which you can read in fullĀ HERE, that the purchases were largely made by consumers over the Internet.

Various concealment methods were discovered during this operation. CBPAS found meat smuggled in fish packets and tea bags, fruits inside sealed cookie bags, loose and packaged seeds within candy wrappers, and seeds in foil-lined bags in an effort to avoid x-ray detection.

The prohibited contraband included fresh plums and other fresh plant products, eggs, propagative plant materials including invasive species, and fresh and processed poultry and pork products coming from countries with known virulent disease outbreaks such as Highly Pathogenic Avian Influenza (HPAI) and Foot and Mouth Disease (FMD).

In total, this special operation yielded 1,104 inspected shipments, 73 shipments Returned to Origin (RTO), 198 Emergency Action Notifications (EANs), four mis-delivery penalties, and 98 mis-manifesting penalties netting a total of $98,000 in fines. Additionally, CBPAS destroyed over 900 pounds of contraband from 146 shipments and found 10 pest interceptions.

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If you need help petitiong for the mitigation of penalties with customs you should contact our office by e-mailĀ or call (734) 855-4999. We areĀ experienced in defending customs penalties and preparing detailed and well argued petitions for mitigation of penalties or liquidated damages. You can also make use of our other articles, such as:

Customs penalties articles:

Customs Seeks to Enforce Ā§ 1592 Penalties for Misclassification at CIT

Posted by Jason P. Wapiennik on

The industry website RubberNews.comĀ has a story about a tire distributor called China Tire out of California who is facing a potential $17 million fraud penaltiy under 19 USC Ā Ā§ 1592 for allegedly fradulent, negligent, or grossly negligentĀ mis-classification of certain bus and truck tires into the United States. According to the story, which relies on the government’s allegations filed in the Court of International Trade, China Tire basically did some broker-shopping after its first customs broker refused to re-classify its product into a duty free Customs Money Seizureprovision of the Harmonized Tariff Schedule (HTS).

Instead of classifying them as bus and truck tires, they were classified as duty-free pneumatic tires. This classification caught the attention of Customs and requests for information were sent out. China Tire responded to these requests that “they were pneumatic tires for passenger cars.” Subsequently, China Tire directed its broker to again change classification to tires that were for agriculture and forestry uses.

What followed were standardĀ 19 USC Ā Ā§ 1592 administrative penalty proceedings:

In July 2011, CBP issued a pre-penalty notice against China Tire and its executives John Cheng and Licheng Wang. In that notice, the complaint said, Wang and Cheng were held jointly and severally liable for 253 false entries, with a proposed penalty of nearly $8.1 million.

China Tireā€™s fraudulent entries cost CBP more than $404,000 in revenue, of which more than $242,000 is still unpaid, according to the complaint.

The current complaint proposes three alternative counts against China Tire, based on charges of fraud, gross negligence or negligence.

If found guilty of fraud, China Tire would face a penalty of nearly $16.9 million, plus the unpaid tariff balance. If found guilty of gross negligence, it would face a penalty of just over $1.6 million, plus the unpaid tariffs. If found guilty of negligence, it would face a penalty of $808,000, plus the unpaid tariffs.

A prior disclosure of the mis-classification would have potentially substantially reduced China Tires’ liability.Ā If you face duty or penalty liability with customs you should contact our office by e-mailĀ or call (734) 855-4999. We areĀ experienced in defending customs 592 penalties, disclosing potential violations through prior disclosures, responding to notices of penalties, and preparing detailed and well argued petitions for mitigation of penalties or liquidated damages. You can also make use of our other articles, such as:

Customs 592 penalties articles:

CBP Counterfeit Handbag Seizure

Posted by Jason P. Wapiennik on with 2 Comments

I am sharing this news releases from Customs & Border ProtectionĀ because it has to deal with topics that we have discussed in previous articles, namely seizures by CBP for counterfeit importations. We previously discussed the notion of gray market goods and touched on the topic of counterfeit imports in our article calledĀ Trademark Infringement: Importing Gray Market Goods and Seizure by Customs. This article only says that the bags were “in violation of the Hermes protected trademark” but does not specifically say how they were in violation; because the news release goes on to say that these bags were concealed within a shipment of non-infringing merchandise it seems unlikely that this was an innocent mistake by an inexperienced importer. It shows an intent to commit a fraud.

Los Angeles ā€” U.S. Customs & Border Protection (CBP) officers and import specialists at the Los Angeles/Long Beach Seaport complex seized 16,053 counterfeit Hermes handbags in nine shipments from June 6 through September 17. All were in violation of the Hermes protected trademark.

Their combined domestic value of $295,665 contrasted to the manufacturer suggested retail price of $210,785,475 had they been genuine, illustrates the potentially high profit margins in such an illegal venture.

ā€œCBP officers are trained to identify and interdict counterfeit goods, and this is a great example of how their training and expertise are employed every day in our ports of entry,ā€ said CBP Director of Field Operations in Los Angeles Todd C. Owen. ā€œThese counterfeiters are not only cheating the legitimate designers and manufacturers of protected trademark merchandise, but also the public and the U.S. government,ā€ he added.

Eight of the shipments were coming from China, one from China via Hong Kong. Two had the knock-offs hidden in the nose of the containers with concealing attempts of packing legitimate, non-infringing merchandise behind them.

Five different importers sent the shipments. All were destined to surrounding areas of Los Angeles except for one destined to Texas.

CBP Counterfeit Handbag Seizure
Approximately $1.26 billion worth of counterfeit goods originating overseas were seized by CBP in 2012. China, Hong Kong, Singapore, India and Taiwan are the top five countries of origination for counterfeit goods seized by CBP.

Nationwide, handbags and wallets comprised the greatest number of counterfeit items seized by CBP last year, with the value of seizures up 142 percent compared to 2011. Of the approximately $511 million in handbags and wallets seized, more than $446 million came from China.

Violations of trade laws, including violations of intellectual property rights laws can be reported to CBP online. ( e-Allegations Submission )

It looks like someone is going to be getting a notice of penalty CBP’s Fines, Penalties and Forfeiture’s office very soon. If you are facing penalties from CBP for items you have imported or for your import practices,Ā call my office at (734) 855-4999 or e-mail us through ourĀ contact page.