The Perils of Bank Drafts Part 2 – Crossing the Border
Last month we discussed the risks of using a bank draft to send money by mail or courier, namely, what can happen if a bank draft is lost in transit.
This month, we will be addressing a different wrinkle relating to bank drafts – crossing the border.
As reported by CBC in July of this year, Mr. David Saikaley was executor of an estate. In an effort to get beneficiaries their share of the estate, Mr. Saikaley mailed five bank drafts of $100,000 each across the border. This was an unfortunate decision for two reasons:
Firstly, as we discussed last month, loss of a bank draft in transit can have such unfortunate consequences that it is generally inadvisable to mail or courier bank drafts for any significant sums of money. Secondly, as Mr. Saikaley found out, customs officials must be appropriately notified if more than ten thousand dollars is crossing the border in either direction.
The CBSA website helpfully explains the following: if a person (or group) is crossing the border in either direction with more than ten thousand dollars, that person (or group) needs to declare that fact. Such a declaration must also be made if more than ten thousand dollars is being sent across the border. These reporting requirements do not just cover cash; they also cover monetary instruments such as stocks, bonds, bank drafts, cheques and traveller's cheques. They are in place as part of CBSA’s anti-money-laundering and anti-terrorism efforts.
The requirements for how to appropriately notify the CBSA are set out nicely on their website where they include clear instructions on how to report and links to the relevant forms. Reporting is not particularly onerous, but failure to do it can have unfortunate consequences.
It is not only the CBSA who requires notification. If more than ten thousand dollars is being moved into or out of the United States, US Customs and Border Protection will also require notification. If a person or group is bringing more than ten thousand dollars into or out of the US or is sending such a sum into or out of the US, US CBP will need to be notified. This is what tripped up Mr. Saikaley.
The bank drafts Mr. Saikaley mailed were seized by US CBP. Fortunately for him, and the beneficiaries, US CBP eventually released the bank drafts but not before everyone involved underwent a great deal of stress and their story ended up in the national news. The outcome could have been worse. As CBSA states on their website:
The CBSA has the authority to seize all currency and monetary instruments if the entire value is not reported. They may be returned after a penalty is paid. Penalties range from Can $250 to Can $5,000. The CBSA will not return the funds if it is suspected they are the proceeds of crime or funds for financing terrorist activities. You can choose to file a review for items that have been seized.”
US CBP has similar powers.
A disclosure requirement for significant sums of money moving into or out of a country is not limited to the US and Canada. Many countries have such requirements, and anyone considering taking or sending large sums in the form of cash or monetary instruments to other countries should consult with border officials in those countries before doing so. Ensuring that one complies with all applicable reporting requirements can help to avoid unhappy outcomes when moving money around the world.