Travelers to Canada and from Canada (Canadians, Canadian residents and visitors) are required to voluntarily self-report to the Canada Border Services Agency (“CBSA”) if they have in their possession currency or monetary instruments that exceeds $Canadian 10,000. When travelers travel to Canada by air, they are given an E311 Declaration Card during the flight to complete. One of the mandatory questions asks whether the person has “currency and/or monetary instruments totaling $Canadian 10,000 or more”. If a person has more than $Canadian 10,000, they must check the box “yes”.
Persons arriving in Canada by air who use the NEXUS kiosk and do not complete an E311 Declaration Card. Instead, they are asked whether they have currency or monetary instruments exceeding $Canadian 10,000 and must touch a button to answer “yes” or “no”.
Persons arriving by vehicle must report currency/monetary instruments exceeding $10,000 to the CBSA officer in the primary booth. The primary CBSA officer will ask as a mandatory question whether the vehicle (that is all the persons in the vehicle combined) has more than $CDN 10,000. If the answer is “yes”, the Primary CBSA officer will refer the vehicle for a mandatory examination and to complete an E667 Form. If the primary CBSA officer does not ask a question about currency, the traveler must voluntarily declare the information anyway.
Persons leaving Canada must locate the CBSA office in the airport (when traveling by air) or stop at the CBSA office at a land border crossing before leaving Canada to report currency/monetary instruments exceeding $10,000. Sometimes this is not an easy task. Usually, the CBSA office is located in the arrivals level of the airport (but not always). If the traveler is pre-clearing in Canada to enter the United States, they must go to the CBSA office first to report the currency AND report the currency to the U.S customs officials in the U.S. Preclearance Area. If you forget, you might be penalized by the authorities of both Canada and the United States.
If a person reports currency/monetary instruments, they are referred to the Secondary Inspection Area (mandatory) to complete an E667 “Cross-Border Currency or Monetary Instruments Report – General”.
If the person answers “no” or does not report the currency/monetary instruments AND the CBSA finds currency and/or monetary instruments exceeding $CDN 10,000, the currency/monetary instruments could be seized and/or administrative monetary penalties imposed if the CBSA is of the opinion that the currency/monetary instruments do not come from legitimate sources.
The CBSA will complete a Statement of Goods Seized when the currency and/or monetary instruments are seized. Usually, the CBSA conducts examinations and interrogations during the secondary inspection. The CBSA Officers involved in the seizure will usually complete Narrative Reports about their dealings with the traveler. The CBSA will also complete an E667 form and will send that form to FINTRAC.
The CBSA will not release the currency and/or monetary instruments if they believe the currency and/or monetary instruments is “proceeds of crime”. The seizure takes place pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
If the CBSA accepts that the currency and/or monetary instruments is not proceeds of crime, they will seize the currency and/or monetary instruments and return the currency and/or monetary instruments after the payment of a penalty ($250 for the first offence, $2500 for a second failure to report or if false information was provided during the Secondary Inspection, $5000 for a third failure to report). If the person has failed to report currency and/or monetary instruments more than 3 times, the CBSA may not release the currency and/or monetary instruments.
If the traveler cannot demonstrate to the CBSA that the currency and/or monetary instruments is from legal sources, the CBSA will not release the currency and/or monetary instruments. With respect to some cultures, proving currency and/or monetary instruments is not “proceeds of crime” is not an easy task.
What should a person do if their currency is seized by the CBSA?
If the CBSA has seized currency and/or monetary instruments, you may file a request for a review to the Recourse Directorate. The Request for a Minister’s Decision must be filed pursuant to section 25 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act within 90 days of the date of the seizure. If you file the Request for a Minister’s Decision late, it will not be considered by the Recourse Directorate (because there is a statutory deadline). We recommend that you get assistance from a lawyer because you will have to organize evidence. It is difficult to know what evidence to provide.
We have been involved in many currency and/or monetary instruments seizures by the CBSA. Based on our experience, it is always necessary to provide additional documentation to prove that the currency and/or monetary instruments are from legal sources. A letter or written statement is never enough in the eyes of the CBSA because people will say anything to get money back. The CBSA wants to see a paper trail to the source of the funds. The CBSA is asking whether the large sum of cash is being laundered. The CBSA is asking if the funds come from illegal activities. The CBSA is asking whether the money is to be used to fund terrorist activities. The CBSA is asking whether the traveler is committing some other form of illegal activity. These questions can be successfully answered with evidence that can be corroborated. More evidence is better than less evidence. The CBSA believes that if the currency or monetary instrument is legal, there should be an abundance of proof.
- A client was able to successfully show that currency was not proceeds of crime by providing proof of legal employment, direct deposit of pay from the legal employment into a bank account and a recent withdrawal from the bank account for the amount in the person’s possession;
- A client was able to successfully argue that an unendorsed cheque written by the person to himself as the payee was not a “monetary instrument” because it had to be endorsed before a bank would release the funds;
- A client was able to successfully show that currency was a bequest and was received from the executor of his grandfather’s estate two days prior to travel to Canada. The executor provided a copy of the will, evidence of the reading of the will and proof of payment; and
- A client was able to successfully show that he owns real property (rental apartments) and earns cash from tenants who pay their rent. We had to provide evidence of the rent rolls and that he paid all applicable taxes (that is, he was not operating in the underground economy).
Many other travelers to Canada have not been so lucky in demonstrating to the CBSA the legitimacy of the source of the cash. There are many cases. In one case, the person could prove that he received the cash from family members. However, he could not prove that the family members received the cash from legal sources. It was necessary to get very private financial information from the family members about legal employment, bank accounts, etc.
In another case, the traveler was a waitress and did not put all her tips in a bank account. She could not prove to the satisfaction of the CBSA that the money was not proceeds of crime because the CBSA believed the money should have gone into a bank account. The question was raised whether the traveler committed tax evasion (because if the cash tips were not reported as income, they would have been proceeds of crime).
There is some discussion as to whether persons with offshore bank accounts in certain countries are importing proceeds of crime if they bring cash or bank drafts to Canada and do not report the currency and/or monetary instruments. The Canada Revenue Agency has taken the position that Canadians have offshore accounts in order to commit tax evasion.
For more information or if you would like help organizing the evidence to prove to the CBSA that the cash is from legal sources, please contact Cyndee Todgham Cherniak at 416-307-4168 or by email at email@example.com.