Tag: customs

CBP Money Seizure Techniques

U.S. Customs & Border Protection (CBP), among its many missions and responsibilities, tries to stop the flow of illegal goods and dirty cash flowing across the borders. In past articles, we wrote about how CBP money seizure techniques target people who might be transporting more than $10,000. Read our piece about Targeted Enforcement for Customs Money Seizure.

But exactly how CBP chooses their targets is less well known. This television show Border Wars has an an episode on Youtube that shows some of the CBP money seizure techniques in use to identify certain people for inspection to verify the amount of cash they are carrying.

If more than $10,000 cash, or if the traveler’s story is suspicious, Customs can seize the cash.

Curiously, the narrator of this program says that for CBP to seize the money it must total more than $10,000. That’s not quite true, customs can also seize it if they feel it is connected to illegal activity under any number of criminal statutes.

In this case, however, the seizure was $65,000, so there was a failure to report (along with bulk cash smuggling) that resulted in seizure. To see the relevant parts, skip to 8:40, 18:30 and 25:00.

Have you been the victim of CBP money seizure techniques?

If Customs and Border Protection seized money from you, you can learn more from our trusted legal guide toa customs money seizure and can contact us for a free currency seizure consultation by clicking the contact buttons on this page.

U.S. Money Seized by Customs (CBP) Stacked on a Table with Envelopes

Dulles Airport Cash Seizure Nets CBP $40K

A Dulles airport cash seizure resulted in a $40,000 loss for a Ghanaian man who had his money seized by U.S. Customs & Border Protection (CBP) for allegedly falsely reporting having only $10,000, while he had hid another $30,000 within packages in his luggage. The hiding of the money is bulk cash smuggling, and the report of only $10,000 is a failure to report violation.

Dulles airport cash seizure showing $40,00 stacked on a table with envelopes
CBP officers seized $40,019 from a Ghanaian man for violating federal currency reporting laws at Washington Dulles International Airport on December 5, 2015.

The story, which we are including below, says that the person was told by Dulles CBP how to file an administrative petition for return of the “rest of the currency”. Here’s the truth about that: if the CAFRA notice of seizure alleges bulk cash smuggling (which is very probably based on what we are told here), then this person might only get back half of his money, or less, for the violation.

 This is why you should never take legal advice from someone who’s not a lawyer, and especially from a customs officer who just seized your money.
It may be more beneficial for this man to file a CAFRA seized asset claim form or make an offer in compromise, not a petition. If you’re wondering how best to handle your Dulles airport cash seizure or one that occurred somewhere else by customs,  contact us and read all we have written about customs money seizures.

The Dulles airport cash seizure news release excerpt, as told by CBP:

U.S. Customs and Border Protection (CBP), Office of Field Operations (OFO), at Washington Dulles International Airport seized $40,019 Saturday from a Ghanaian citizen for violating federal currency reporting regulations.

There is no limit to how much currency travelers can import or export; however federal law requires travelers to report to CBP amounts exceeding $10,000 in U.S. dollars or equivalent foreign currency.

A man was boarding a flight to Ghana and was selected for questioning by CBP officers who were conducting an outbound enforcement operation on an international flight.  The man completed a financial form, reporting $10,000, however; a total of $40,019 was discovered — $10,019 on his person and $30,000 in his luggage secreted inside two computer boxes.  CBP officers seized the $40,019 and advised him how to petition for the return of the rest of the currency.

“Travelers who refuse to comply with federal currency reporting requirements run the risk of having their currency seized, and may potentially face criminal charges,” said Wayne Biondi, CBP Area Port Director for the Port of Washington Dulles. “The traveler was given the opportunity to truthfully report his currency. The easiest way to hold on to your money is to report it.”

 

Tuition Money Seized by Customs

Customs seizure of tuition money is a common occurrence in the weeks prior to the start of either semester of the school year. Like all customs currency seizures, the seizure typically happens because of a failure to file a currency report by people transporting money into the United States of amounts over $10,000.

Lots of foreign students come to the United States and pay their tuition in cash as most colleges won’t accept tuition payments by credit card. Likewise, many foreign exchange students and children of immigrants get a lot of cash assistance from family overseas who understand their duty to pay for their children’s education; it may be a lump $15,000 sum from a parent or grandparent, or a few hundred or thousand dollars from several different relatives or benefactors.

Customs can easily identify someone on student visa, who is relatively young, and is arriving from China, India or Korea; we previously wrote about how customs can “target” currency reporting enforcement based on just these types of criteria. This makes it very easy for them to target students who will then be required to give an accurate report of currency down to the dollar, and if they don’t to seize their cash. The only thing higher than the cost of education is the cost of not accurately reporting money over $10,000 to customs.

What to do when Customs seizes your tuition money?

Traveling with cash? Claim monetary instruments exceeding $10,000 USD!
Don’t let customs seize cash. Traveling with cash? Claim monetary instruments exceeding $10,000 USD!

Take the advice we have already given for responding to a customs money seizure by reading our popular article on the topic: Responding to a Customs Currency Seizure. Currency seizure cases are handled the same whether the money that was seized by customs was intended to be used to pay for college tuition or, for example, for travel expenses. As long as the use of the money is legitimate (and tuition is a legitimate use) and the source of the money is legitimate, with the right legal help you have a good chance of getting your seized tuition money back. If you want to know what a petition to get seized money back from customs looks like, read our article here.

Will I get the money in time to pay my tuition?

It really depends on a variety of circumstances, as we talked about in our popular article on the topic: How long does it take Customs to decide a petition for a currency/monetary instrument seizure? In every case, hiring the right attorney to handle your case can speed up the process, from getting the notice of seizure issued, to gathering evidence (obtaining supporting documents, preparing affidavits and giving customs everything they need without waiting for them to request additional documents), researching and drafting the legal basis for the obtaining a return of the seized currency in the petition, and ultimately, if successful, getting the money returned without delay, often by direct deposit. We work hard at Great Lakes Customs Law to get your seized currency returned back to you in a timely manner by doing the job right the first time.

How can I find out more or hire a law firm to help with my customs currency seizure?

If you have had cash seized by customs and are contemplating what to do next, please make use of the other information available on this website or call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist with cash seized by customs around the country, including Detroit, Chicago, Atlanta, New York, Los Angeles, Orlando and many other places. Please read these other articles:

  1. Seizure of currency and monetary instruments by U.S. Customs
  2. Seizure for bulk cash smuggling into or out of the U.S.
  3. Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. Responding to a Customs currency seizure
  8. How do I get my seized money back?
  9. Getting money seized by U.S. Customs back while staying overseas
  10. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?

Information on currency and monetary instrument seizure by Customs

CBP took cash over $10,000? Read here to help you along the way.
Money seized by customs? CBP took cash over $10,000? Read here to help you along the way.

We get many calls from people across the country who, either having just crossed a land border or cleared Customs at an airport, have money or its equivalent seized by U.S. Customs and
Border Protection for failure to report amounts over $10,000, or for stating an inaccurate amount being transported. In this series of blog posts, I will answering some of the most frequently asked questions about currency seizures, reporting requirements, and the process we use for getting your seized money back from Customs.

Did you have your money seized by Customs?

This experience with Customs is usually a traumatic one for most people, not only because a big chunk of your savings is suddenly gone, but also because Customs often detains a suspect for hours while separating you from your traveling companions and interrogating each of you about the source and purpose of the money. They will make you feel like the worst of criminals.

“Why does Customs seize the money if I’ve done nothing wrong?”

In most cases, Customs usually seizes money because of a violation of the Currency and Foreign Transactions Reporting Act (although certain situations might give rise to allegations of failure to declare or some type of smuggling, such as bulk cash smuggling). Specifically, 31 USC  § 5316 and 5317, a part of the Federal law, as well as Federal Regulations, give Customs the authority to seize your cash, currency, or things like checks, promissory notes, traveler’s checks, money orders, and certain securities and stocks if you fail to report or misreport amounts in excess of $10,000. The law requires that this report be made so they can more easily detect money laundering and other financial crimes.

Why most people have their money seized

People fail to report, or misreport currency and monetary instruments for a variety of reasons. It can be mistrust of government agents (usually foreign born people who grew up under very corrupt governments), lack of knowledge of the presence of money, not knowing exactly how much cash you have, a language barrier, confusion about whether non U.S. currency must be reported, how the law applies to more than one person, or good old-fashioned panic.

If you have had currency seized from Customs do not try to respond yourself but hire our firm, because we know what we are doing and have successfully handled many cases like yours. If you have questions, please give us a call at (734) 855-4999. We are able to assist with cash seized by customs around the country, including Chicago, Atlanta, New York, Los Angeles, Orlando and many other places, and not just locally in Detroit. Please read these other articles:

  1. Seizure of currency and monetary instruments by U.S. Customs
  2. Seizure for bulk cash smuggling into or out of the U.S.
  3. Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. Responding to a Customs currency seizure
  8. How do I get my seized money back?
  9. Getting money seized by U.S. Customs back while staying overseas
  10. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?
  11. Statute of Limitations for Currency Reporting Violations
  12. Filing a Petition for Seized Currency (with Sample and Tips) with CBP
  13. Don’t Talk About Your Customs Currency Seizure Case

 

CBP Seized $109K in Unreported Funds

On the tails of our last currency seizure post (here) comes this story about an elderly Yuma, Arizona man concealing a total of nine packages of currency in his windshield cowling in an apparent effort to smuggle it out of the country and into Mexico. Like the last story, this is more about smuggled currency rather than just “unreported funds,” which is a bulk cash smuggling violation. This is a little different than the usual cases we handle, which are seizures of money by customs at the airport (but, you can read our popular page on Responding to a Customs Money Seizure HERE).

On to this story:

Tucson, Ariz. — A 74-year-old Yuma man was arrested Monday for attempting to smuggle nearly $109,000 in unreported U.S. currency into Mexico through the Port of Nogales.

Hidden Cash Seized by Customs

U.S. Customs and Border Protection officers conducting outgoing inspections referred a Ford SUV for further inspection at the Dennis DeConcini crossing and located nine packages of currency hidden within the windshield cowling.

Officers seized the unreported currency and referred the driver to U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

On Sept. 16, officers at the Mariposa crossing seized more than $189,000 found in the roof of a vehicle attempting to cross into Mexico.

If you have had cash seized by customs and are contemplating what to do next, please make use of the other information available on this website or call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist with cash seized by customs around the country, including Chicago, Atlanta, New York, Los Angeles, Orlando and many other places, and not just locally in Detroit.

Read these other articles about customs money seizures:

  1. Seizure of currency and monetary instruments by U.S. Customs
  2. Customs currency seizure for bulk cash smuggling into or out of the U.S.
  3. Customs currency seizure; Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. Getting money seized by U.S. Customs back while staying overseas
  8. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?
  9. Customs currency seizure; Tuition Money Seized by Customs

U.S. Customs Money Seizure Story; $145,000 Confiscated

Below is a news release concerning a customs currency seizure of more than $145,000 for failure to report and bulk cash smuggling (concealing money in cellophane bundles wrapped inside a shopping bag is predictably ripe for allegations by customs of bulk cash smuggling). 

Based on the fact that the woman was arrested and the the prevalence of drug money seeping across the U.S.-Mexico border, it seems highly likely that something illegal was happening here. However, innocent people who simply failure to report the amount of currency they are transporting get their currency seized and confiscated by customs everyday at airports and land borders. These people can get their money back with the if they follow the right steps to respond to their currency seizure.

Even though this person was arrested, they have the right to try to get the money back by proving legitimate source and legitimate intended use. The CBP news release also correctly states the person can petition to have the seized money returned, but there are other options, too: a claim could be filed which initiate judicial forfeiture of seized currency, and I occasionally there are cases where making an offer in compromise makes sense.

On to the full story:

EL PASO, Texas – U.S. Customs and Border Protection (CBP) officers and U.S. Border Patrol agents working at the El Paso port of entry seized $146,070 Thursday evening. The money was hidden in a shopping bag inside a vehicle that was leaving the U.S. at the Bridge of the Americas international crossing at the El Paso port of entry.

CBP officers and Border Patrol agents were conducting a southbound inspection operation at the BOTA crossing when a 2011 Dodge Durango attempted to leave the U.S. at approximately 11:15 p.m. CBP personnel selected the vehicle for an intensive examination after a preliminary interview with the driver. CBP currency detector canine “Nouska” searched the vehicle and alerted to a bag inside the vehicle. CBP officers and Border Patrol agents found three cellophane wrapped bundles inside the bag. The bundles were opened revealing the U.S. currency. CBP officers seized the currency. CBP officers dicovered [sic] three bundles of currency in a vehicle leaving the U.S. at the El Paso port of entry.

CBP officers took custody of the driver, 40-year-old Jennifer Guadalupe Hernandez, a U.S. citizen residing in El Paso. She was arrested by U.S. Immigration and Customs Enforcement HSI special agents in connection with the failed smuggling attempt and booked into the El Paso County jail where she is being held without bond.

“CBP officers and Border Patrol agents are checking southbound traffic everyday trying to stop guns, ammunition and unreported currency from being smuggled out of the country. Their diligence paid off in this enforcement action,” said Hector Mancha, U.S. Customs and Border Protection El Paso port director. “The unreported cash that we seize has an impact on the criminal organizations by making it more difficult for them to further their illicit activities.”

Individuals are permitted to carry any amount of currency or monetary instruments into or out of the U.S. However, if the quantity is $10,000 or higher, they must formally report the currency to CBP. Failure to report may result in seizure of the currency and/or arrest. An individual may petition for the return of currency seized by CBP officers, but the petitioner must prove that the source and intended use of the currency was legitimate.

We handle currency seizure cases that occur at the Detroit airport and land border crossings like the Detroit/Windsor-Tunnel and Ambassador Bridge on a regular basis, and have been very successful in getting our client’s money back from customs.  If you have had money seized by Detroit CBP/customs, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page.  We are able to assist with cash seized by customs nationwide, including Detroit, Chicago, Atlanta, New York, Los Angeles, Las Vegas, and Orlando. Please read these other articles from our customs law blog:

  1. Seizure of currency and monetary instruments by U.S. CustomsKeep Calm and Declare Monetary Instruments Exceeding $10,000 USD
  2. Seizure for bulk cash smuggling into or out of the U.S.
  3. Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. How do I get my seized money back from customs?
  8. Getting money seized by U.S. Customs back while staying overseas
  9. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?
  10. Targeted Enforcement for Customs Money Seizures

Fake Soccer Clothing Seized by Customs

Recently, Customs made a large seizure of counterfeit soccer club apparel in Puerto Rico. We have previously discussed, in a two article series, about the dangers of importing counterfeit trademark merchandise into the United States, how it can result in seizure, monetary penalties, and what can be done.

This story underscores the importance of everything we discussed in those articles: Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1 and Part 2 and Importing Grey Market Goods (click to read). The story is below, with my emphasis in bold:

With a high demand for the 2014 FIFA World Cup related apparel, some dishonest vendors sought to capitalize on the event’s popularity, infringing on various trademark holder’s rights and revenues. On Tuesday, U.S. Customs and Border Protection (CBP) San Juan Field Operations officers seized a consignment of counterfeit soccer team delegation uniforms. The shipment arriving from Hong Kong to the San Juan Air Cargo facility, contained boxes of soccer t-shirts and shorts that were destined to an address in San Juan, Puerto Rico.

“The trade in these illegitimate goods is associated with smuggling and other criminal activities, and often funds criminal enterprises”, stated Area Port Director Juan Hurtado. “Protecting intellectual property rights (IPR) remains a CBP priority.” Further inspection revealed that the uniforms of the fake Brazilian, Italian and Argentinian national teams violated the IPRs of Puma, Adidas and Nike.

[ . . . ]

During FY 2013, CBP field operations conducted more than 164 seizures related to IPR violations, with a domestic value of approximately $1.9 million. Trade in counterfeit and pirated goods threatens America’s innovation economy, the competitiveness of our businesses, the livelihoods of U.S. workers, the economic security of our country, and in some cases, the health and safety of consumers.

Importing counterfeit items into the United States is a very serious matter. First, it is very likely that after seizure the property will be forfeited and destroyed by the U.S. government if, in fact, they are counterfeit. Once forfeiture is perfected, the person who caused the importation will probably get a notice of penalty from U.S. Custom & Border Protection in the mail for the equivalent of the value of the products if they were real.

The person will have a chance to respond to customs’ notice of penalty with the Fines, Penalties, and Forfeitures office by filing a petition for mitigation and ask customs to reduce the penalty based on the presence of certain mitigating factors that customs particularly looks for. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely. If the person fails to pay the penalty, the government can bring a lawsuit in federal district court to recover the penalty in the form of a judgment, after which point the government can lien property, garnish bank accounts, and seize property.

If you have had money or merchandise seized by customs because they allege it is counterfeit and contains trademark violations, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs seizures nationwide.

Customs Seizure of $91,215 in Currency at Border

Below is a news release quoted from customs about a $91,215 customs currency seizure. If this person whose cash was seized by customs wasn’t up to anything illegal, then customs currency seizure was totally avoidable. He would have had to file the currency report, and demonstrate a legitimate source and legitimate intended use for the money. That is still what he will have to do if he wants to get the money back. But, he could have taken it with him had he only not hid the money and given Customs what they needed.

Let’s have a look at the story:

U.S. Customs and Border Protection officers conducting inbound enforcement operations at the Brownsville Port of Entry seized $91,215 in bulk U.S. currency.

On May 29, 2014, CBP officers working enforcement operations at the Gateway International Bridge came in contact with a 2008 Chrysler Town & Country as it attempted to enter the United States. The driver, an 18 year-old United States citizen from Brownsville, Texas was referred to secondary for further inspection. In secondary, a search of the Town & Country resulted in the discovery of packages containing $91,215 in bulk U.S. currency hidden within the vehicle.

CBP officers seized the currency; the driver has been transferred into the custody of U.S. Homeland Security Investigations (HSI) special agents for further investigation.

“Persistence and dedication in northbound enforcement inspections are critical to our efforts of keeping undeclared currency from being imported without meeting proper reporting requirements. I commend our CBP officers for an outstanding seizure and arrest in this alleged bulk currency smuggling case,” said David Moreno, acting CBP Port Director, Brownsville.

It is not a crime to carry more than $10,000, but it is a federal offense not to declare currency or monetary instruments totaling $10,000 or more to a CBP officer upon entry or exit from the U.S. or to conceal it with intent to evade reporting requirements. Failure to declare may result in seizure of the currency and/or arrest. An individual may petition for the return of currency seized by CBP officers, but the petitioner must prove that the source and intended use of the currency was legitimate.

CBP Field Operations at Brownsville Port of Entry is part of the South Texas Campaign, which leverages federal, state and local resources to combat transnational criminal organizations.

If you have had money seized by customs call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist with cash seized by customs nationwide, including Detroit, Chicago, Atlanta, New York, Los Angeles, Las Vegas, and Orlando.

Please read these other articles from our customs law blog:

  1. Seizure of currency and monetary instruments by U.S. Customs
  2. Seizure for bulk cash smuggling into or out of the U.S.
  3. Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. How do I get my seized money back from customs?
  8. Getting money seized by U.S. Customs back while staying overseas
  9. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?
  10. Targeted Enforcement for Customs Money Seizures

Customs Currency Seizure; Criminal Charges for Bulk Cash Smugglers

U.S. customs effected a currency seizure of unreported currency under the bulk cash smuggling laws from citizens of the Dominican Republic and United States, who are all related and travelling together.  Some interesting things to note about this story is that although the money seems to be from a legitimate source because the story says it was from a business, criminal charges were nevertheless brought against all individuals involved in the bulk cash smuggling. Bulk cash smuggling is illegal, no matter the source. We have written articles about bulk cash smuggling before HERE.

SAN JUAN, Puerto Rico — U.S. Customs and Border Protection (CBP) officers seized $53,000 in unreported currency Friday, transported by three passengers boarding the M/V Caribbean Fantasy ferry departing to Santo Domingo, Dominican Republic.

CBP Officers selected Dominican Republic citizen Mr. Felipe Alvarez, 69, for examination and explained to him the currency reporting requirements.  During the interview, Mr. Alvarez declared to be traveling alone and transporting less than $10,000. Intensive examination revealed that he was traveling with two other passengers, US citizen Manuel De La Rosa, 47, and Dominican Republic citizen Cristian De La Rosa, 35, both nephews of Mr. Alvarez.

Subsequent interview and exam of the three passengers revealed non reported currency within their clothing and in their carry-on items totaling $53,726.00. Mr. Alvarez later admitted that the money transported by him and his nephews were proceeds of his business in the Dominican Republic.

The currency was seized under bulk cash smuggling laws and Assistant AUSA Olga CastellĂłn approved criminal prosecution for the three individuals.

Those arrested were remanded to the custody of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) for processing and further investigation.

“The unreported cash that we seize has an impact on criminal organizations by making it more difficult for them to further their illicit activities,” said Juan Hurtado, San Juan area port director. “CBP officers remain vigilant generating important enforcement activity regularly.”

Individuals are permitted to carry any amount of currency or monetary instruments into or out of the United States.  However, if the quantity is $10,000 or higher, they must formally report the currency to CBP. Failure to report may result in seizure of the currency and/or arrest.

Source: http://www.dominicantoday.com/dr/local/2013/1/28/46527/US-agents-seize-US53000-from-local-man-at-San-Juan-Seaport

If you have had money seized by customs call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist with cash seized by customs nationwide, including Detroit, Chicago, Atlanta, New York, Los Angeles, Las Vegas, and Orlando.

Please read these other articles from our customs law blog:

  1. Seizure of currency and monetary instruments by U.S. Customs
  2. Seizure for bulk cash smuggling into or out of the U.S.
  3. Structuring currency imports and exports
  4. Is it $10,000 per person?  Under what circumstances is filing a report with Customs for transporting more than $10,000 required?
  5. Criminal & civil penalties for failing to report monetary instrument transportation
  6. Is only cash currency subject to seizure by Customs?
  7. How do I get my seized money back from customs?
  8. Getting money seized by U.S. Customs back while staying overseas
  9. How long does it take Customs to decide a petition for a currency/monetary instrument seizure?
  10. Targeted Enforcement for Customs Money Seizures

Customs Country of Origin & Substantial Transformation

Determining country of origin for U.S. Customs marking purposes can at times be easy but other times it can be very difficult. This depends largely on the number of countries involved and the processes the merchandise undergoes in those countries. We have previously discussed how to properly mark country of origin on imported merchandise in another article (READ IT HERE).

In this article, we will try to briefly explain how country of origin is determined for customs marking purposes for merchandise imported from countries that the U.S. does not have a special trade agreement with. ((Different laws often apply for determining country of origin when there is a free trade agreement in place, as of this writing, the U.S. has free trade agreements with Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore.)) At the time of posting this article, then, these rules for determining country of origin is appropriate for countries such as China, Germany, Switzerland, England, Italy, and some others where there is no special, overriding, trade agreement.

How is country of origin determined?

For customs purposes, country of origin is the country of manufacture, production, or growth of any article. If only one country is involved in the production, manufacture, or growth of the article, that is the country of origin.

However, for articles that are manufactured or produced with materials from more than one country, or which undergo further production or manufacture in more than one country, the country of origin is the country where the article last underwent a “substantial transformation.” Substantial transformation is defined as the process whereby the article is turned into a new and different article of commerce, with a different and distinct name, character, and use from the article as it was previously. ((19 CFR 134.1(d); In United States v. Gibson-Thomsen Co., 2 Cust. Ct. 172 (1938); U.S. Rules of Origin, CBP (2004), p. 9.))

Again, these rules are only for countries that the U.S. does not have a special trade agreement with. So, for example, there are different country of origin marking rules for NAFTA.

When is merchandise “substantially transformed” for country of origin purposes?

What constitutes a “substantial transformation” for any particular article depends on the specific type and amount of production and manufacturing that the article undergoes. For this reason, no general guideline beyond creating a “new and different article of commerce, with a different and distinct name, character, and use” is possible.

For that reason, each article’s country of origin must be determined on a case-by-case basis. If it is difficult to determine country of origin for a particular article, it might be necessary to get formal guidance from customs through a request for a prospective ruling, which usually results in customs issuing a formal ruling letter that they are obliged to honor. It can also be helpful to review previously issued ruling letters to find similar cases, and get a sense for how the law is applied to a particular situation. This should only be done by a customs lawyer or an experienced broker, who understands the law and the exact phases of production of the imported merchandise.

What happens if imported merchandise has an incorrect country of origin marking?Keep Calm and Contact Your Customs Attorney

If country of origin marking is wrong, Customs will deny release of imported products, or if already released from Customs custody, they will be required to be returned via redelivery notice. Customs may impose and collect an additional duty of 10% of the article’s value before allowing release (“marking duties”), an amount in addition to any other duties normally owed, if any. Before release, Customs will  require that the article be marked with the correct country of origin and until marked duties paid.

Customs Attorney Consultation for Country of Origin and Marking Requirements

If you have a question about proper country of origin marking, identifying the actual country of origin, otherwise determining how to comply with the Customs rules concerning proper country of origin marking for imported merchandise, or if your competitor is not marking or mis-marking country of origin on their products, you should contact our office at 734-855-4999 or send us a message on our contact page. We can always help.