Fighting Title 31 Currency Seizures issued by CBP

This article is going to cover a specific subsection of Title 31 currency seizures. These seizures are typically initiated by U.S. Customs and Border Protection (CBP) to travelers who fail to declare currency they are traveling with in excess of $10,000. Additionally, CBP may seize currency when travelers conspire to defeat reporting requirements by structuring the carrying of funds to fall below the reporting threshold (for example, a group of five individuals carrying money for one person and each person holds $9,000 instead of the single owner of the funds carrying $45,000 total).

For those unfamiliar, CBP is a federal agency within the Department of Homeland Security that was formerly the U.S. Customs Service. CBP is charged with securing the country’s borders and preventing dangerous items and individuals from entering the country. CBP enforces a broad range of laws from agricultural laws, to product safety laws, foreign asset control laws, and classic trade laws and that involve collecting duty on foreign imported merchandise.

Title 31 currency-related violations

Title 31 of the United States Code includes various monetary, banking and financial rules. Covering the entirety of Title 31 far exceeds the scope of this article. Instead, we will focus on the two most common Title 31 violations enforced by CBP. Those violations include: 1) failing to report currency when you travel internationally (entering or leaving the United States) and are carrying more than $10,000, and; 2) structuring, wherein you purposefully structure the amount of money individual(s) are carrying to avoid currency reporting requirements.

31 U.S. Code § 5316 – Reports on exporting and importing monetary instruments

This section of Title 31 covers the first scenario discussed above, wherein an international traveler, when leaving or entering the Unite States, fails to declare that they are carrying currency in excess of $10,000 U.S. Dollars. The core of section 5316 follows:

(a)Except as provided in subsection (c) of this section, a person or an agent or bailee of the person shall file a report under subsection (b) of this section when the person, agent, or bailee knowingly—

(1)transports, is about to transport, or has transported, monetary instruments of more than $10,000 at one time—

(A) from a place in the United States to or through a place outside the United States; or
(B) to a place in the United States from or through a place outside the United States;

31 U.S. Code § 5316(a)

The purpose of this statute is to prevent the transport of large amounts of currency without informing the government. It is important to note that carrying more than $10,000 in currency is not illegal. However, it is a violation of law if you fail to report when you are carrying large amounts of currency (> $10,000) internationally. The government has established these reporting requirements for a number of reasons, the most prominent being that it prevents money laundering. Moreover, it is common for illicit activity, like the drug trade, to be transacted in currency outside of the banking system. This reporting requirement attempts to regulate large currency transfers and prevent them from going undetected outside of regular banking institutions.

 

31 U.S. Code § 5324 – Structuring transactions to evade reporting requirement prohibited

This section of Title 31 relates to structuring banking transactions or the carrying of currency across U.S. border’s to avoid reporting requirements. The relevant part of section 5324, as it relates to section 5316, is reproduced below:

(c)International Monetary Instrument Transactions.—No person shall, for the purpose of evading the reporting requirements of section 5316—

(1) fail to file a report required by section 5316, or cause or attempt to cause a person to fail to file such a report;

(2) file or cause or attempt to cause a person to file a report required under section 5316 that contains a material omission or misstatement of fact; or

(3) structure or assist in structuring, or attempt to structure or assist in structuring, any importation or exportation of monetary instruments.

31 U.S. Code § 5324(c)

This section tries to minimize the circumstances in which parties may evade the reporting requirements of 31 U.S. Code § 5316(a). As mentioned before, a classic example is where multiple people carry a single entity’s currency so that none of them exceed the reporting requirement. Were a group of individuals to do this, they should expect that all of the group’s currency will be seized for violating 31 U.S. Code § 5324.

A less sophisticated example of structuring would be where an non-married couple transit through customs separately but the boyfriend is actually carrying $9,000 of the girlfriend’s money and she is carrying $9,000 of her own money as well. Technically neither of them trigger the reporting requirement, however, the fact that the money is the girlfriends and the fact that they distributed the currency to avoid the $10,000 reporting requirement suggests the money could be seized for structuring in violation of 31 U.S. Code § 5324(c).

What happens once my money is seized for a Title 31 violation?

So, what happens if CBP believes you have violated one of the above listed laws? Most likely they will ask you questions about why you were carrying the money, who you were carrying it for, where you got it, and how you planned to spend it. How you answer those questions could be critical to the determination CBP makes about the legality of your actions and whether you are entitled to any leniency later on if they pursue seizure and forfeiture.

If CBP ultimately determines that a violation has occurred, they will initiate a seizure action. Usually this will involve counting the total amount of currency then issuing a “Custody Receipt for Detained or Seized Property” (CBP Form 6051A). This form will include an accounting of the money seized and a chain of custody for the officers to complete. It is important that you provide accurate contact information to the officers because they will send an official seizure notice to the address you provide them that day. Sometimes the officers will not seize all the money you are transporting and will return some back to you for “humanitarian” reasons. The purpose of this money is to allow you to cover small costs and not leave you destitute if you were planning to fund your travels solely with the cash you were carrying. Usually the humanitarian release is a small percentage of the total money seized, so for a $50,000 currency seizure they may release $500 or $1,000 to the traveler for humanitarian reasons.

After you are released and the money is seized, it will be transferred to CBP’s Fines, Penalties & Forfeitures Office for further processing. This is the office that will issue the official seizure notice which is usually titled “NOTICE OF SEIZURE AND INFORMATION TO CLAIMANTS CAFRA FORM.” CAFRA, in this context, stands for the Civil Asset Forfeiture Reform Act of 2000 which governs the procedure for processing certain seizure and forfeiture actions. It is important that you respond promptly to the seizure notice. Generally, you only have 30 days to file a petition for relief in response to a seizure. See 19 C.F.R. § 171.2(b). The deadline for requesting judicial forfeiture is usually 35-days after mailing of the notice. 18 U.S. Code § 983(a)(2)(B). Every agency and office may vary these deadlines slightly, but the general guidance is that you need to act promptly. Sitting on a seizure notice could lead to you losing the right to challenge the forfeiture of the property, which would result in a total loss of all seized funds.

What is forfeiture?

Seizure is the taking of funds by the government when there is a cognizable theory (probable cause) as to how those funds are connected to some illegal activity. Forfeiture is the next step in the process after seizure, wherein the government initiates the formal process of taking legal title to those funds. This is an important distinction: seized funds, while they may be held by the government they are not legally owned by the government, but once a forfeiture action is completed successfully, title to the forfeited funds formally passes to the federal government. In short, forfeiture transfers title of property from an individual to the government.

31 U.S. Code § 5317 – Search and forfeiture of monetary instruments

The laws we discussed above explain what activity is prohibited and what constitutes a violation of law. This section specifies the actions the government can take to prevent such violations, and what it can do in response to discovered violations. The relevant section follows:

(b)Searches at Border.—
For purposes of ensuring compliance with the requirements of section 5316, a customs officer 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.
(c) Forfeiture.—
(1) Criminal forfeiture.—
(A)In general.—
The court in imposing sentence for any violation of section 5313, 5316, or 5324 of this title, or any conspiracy to commit such violation, shall order the defendant to forfeit all property, real or personal, involved in the offense and any property traceable thereto.
(B)Procedure.—
Forfeitures under this paragraph shall be governed by the procedures established in section 413 of the Controlled Substances Act.
(2)Civil forfeiture.—
Any property involved in a violation of section 5313, 5316, or 5324 of this title, or any conspiracy to commit any such violation, and any property traceable to any such violation or conspiracy, may be seized and forfeited to the United States in accordance with the procedures governing civil forfeitures in money laundering cases pursuant to section 981(a)(1)(A) of title 18, United States Code.

31 U.S. Code § 5317 (emphasis added).

As you can see, this law gives CBP the right to search any person entering or departing from the United States. It also allows for the criminal or civil forfeiture of any assets that have been found to violate sections 5316, or 5324.

Conclusion

Hopefully you found this guide helpful. At this time we are not taking on any new clients. All information provided above is for reference purposes and should not be construed as legal advice. You should consult with a licensed attorney before taking any action in your case.

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New executive order on anti-dumping and countervailing duties

In keeping with President Trump’s theme of protecting American industry and tightening potential trade abuses, on March 31, 2017, President Trump issued an executive order titled: “Establishing Enhanced Collection And Enforcement Of Antidumping And Countervailing Duties And Violations Of Trade And Customs Laws.” Here is a link to the full order.

Fine money left on the table, a solution?

That order, notes that “As of May 2015, $2.3 billion in antidumping and countervailing duties owed to the Government remained uncollected, often from importers that lack assets located in the United States.” Having worked at CBP I saw how difficult it was to collect on these penalties, especially actions involving foreign nationals.

Increased AD/CVD Bonds for high-risk importers

To address this issue the new order proposes that DHS increase “bonding requirements, based on risk assessments, on entries of articles subject to antidumping and countervailing duties, when necessary to protect the revenue of the United States.”

The order mandates that within 90 days, so by June 29, 2017, DHS shall develop a risk-based plan related to increased bonds for AD/CVD imports, along with developing other “appropriate enforcement measures.”

New enforcement procedures for inadmissible merchandise?

The order also puts a similar 90-day deadline on DHS to “develop and implement a strategy and plan for combating violations of United States trade and customs laws for goods and for enabling interdiction and disposal, including through methods other than seizure, of inadmissible merchandise entering through any mode of transportation, to the extent authorized by law.” This passage is interesting because seizure is generally the appropriate and lawful way under which merchandise is taken by the government and disposed of. This new approach will have to fit within the due process rights of the importers of seized merchandise.

Improved communications with IP rights holders

The order also addresses Intellectual Property Rights (IPR) and the desire to increase communication with rights holders regarding infringing importations and information regarding importations that have been voluntarily abandoned but would have violated US Trade laws.

Increased federal prosecutorial resources

Most importantly, the order specifies that federal prosecutorial resources will now be devoted to trade cases, which has been missing in the past. In practice, this means that a lot of these customs violations that have gone unenforced in the past may see a large uptick in civil and criminal enforcement from the U.S. Attorney’s Office.

Whats next? Find out on June 29, 2017.

We’ll have to see what June 29, 2017, will hold but for fringe importers this news is unwelcome. It means that more attention and resources will be directed at these trade violations and you can expect increased enforcement and liability. For rights holders, the news should be welcome as CBP has shown a commitment to protecting the rights of domestic IPR holders consistently through its latest actions.

It will be interesting to see the new DHS rules/regulations and enforcement priorities that develop after June 29, 2017.

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Civil Forfeiture, explained in an entertaining way

I previously talked about the potential for abuse of the civil forfeiture process.  I tried to create a plausible, yet scary, scenario to show just how easy it is for your property to be taken, and how hard it can be to get it back.  This new video from John Oliver’s show, Last Week Tonight, had a great segment about civil forfeiture:

Essentially, the thrust of the segment, which is not without basis, is that civil forfeiture has become a tool of policing for profit.

While the laws are not favorable to those who have had their property seized, you are not without recourse. Even if you do not have the money to hire an attorney, in some instances an attorney will take your case on a contingent fee basis, where they will only collect a fee from you if they help you get your property back.

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How you could lose your assets to Civil Forfeiture

Civil Asset Forfeiture Explained

Civil forfeiture… Many people have no idea what that phrase means.  So, lets break it down.

Civil forfeiture defined

First, the civil part.  Generally there are two broad types of court cases in the U.S., civil and criminal.  Criminal is when the state is prosecuting a person for committing a crime. When you watch Law & Order, those are criminal cases.  The burden of proof for criminal cases is beyond a reasonable doubt–quite a high burden.  Civil cases, by contrast are typically cases where one party is suing another.  Classic examples include, you suing someone when they rear-end you or a business suing another business for failing to meet the terms of a contact. The burden in civil cases is preponderant evidence, which in simple terms means was it more likely than not, or in numerical representation, its more than 50% likely that one side has proven their case.  Preponderant evidence is a much lower burden when compared to proving something beyond a reasonable doubt.

Forfeiture is when the state takes property from an individual, generally due to some sort of wrongdoing that is related to, or perpetrated with use of, the subject property.

Historically, law enforcement agencies would forfeit property subject to a criminal prosecution.  More recently, law enforcement agencies on the federal and state-level, across the country, have started pursuing civil forfeiture independently.

So, right now, you’re saying, “I get it, what’s so bad about civil forfeiture?”  Well, it all comes down to the burden of proof.

Lets work through a quick illustration.

You’re driving back from the dock where you just sold your boat for $12,000 dollars.  You’re happy you got what you were asking and in your after-sale exuberance you happen to run a light that is just turning from red to yellow.  Local law enforcement pulls you over.  They ask to search your car, you oblige; you’ve got nothing to hide. In your center console they find an envelope with $12,000 in it.  You’re driving a big black SUV because, well, it was good for towing the boat.  You happen to have two cell phones because you are self-employed.  Finally, in your center console there are some dried ground up green leaves from when you were bringing ferns back from Home Depot months ago.  Near them are some small ziplock bags you used for fishing gear and figure would be worth holding on to since the new boat owner doesn’t fish and didn’t want them.  OK whats the point?

But guess what?  Your $12,000?  Seized.  Your nice big black SUV?  Seized.  That means you cant use either until the government gives them back to you.  What for?  Well, you’re a suspected drug dealer…

The police report reads something like this ‘green leafy material consistent with marijuana found in center console near plastic baggies which is consistent with drug dealers who package drugs for individual sales in small quantities.  $12,000 cash found with questionable source, again consistent with drug dealer. Individual had two cell phones, consistent with drug dealer.’

You then spend months trying to get your car back.  No criminal case follows but you don’t have a car, you can’t work.  You are draining your savings and that $12,000 from your boat sale would really come in hadny, but guess what that is still subject to forfeiture to.  You never get prosecuted, the case is too weak, but the state proceeds with civil forfeiture.

The Burden of Proof

This is where the burden really matters.  Civil forfeiture, they only have to show that its more likely than not that you were using your SUV to further your drug dealing enterprise and that the $12,000 was proceeds or intended to be used to further your drug kingpin.  With a criminal case and forfeiture they have to prove all that beyond a reasonable doubt. Right now you should be seeing a light bulb.  Law enforcement sure has.  They know criminal cases are tough to win, but with civil forfeiture they can win more cases and bring in the money and resources to keep their operations going.

This scenario sounds pretty crazy right?  Well, sadly, its not.  Civil forfeiture is a huge money-maker for local law enforcement agencies. This is well documented.  It can cause great harm to families and individuals.

 

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