LexSage

Exception to Currency Reporting Rule:

You Do NOT Have To Report If You

Inform CBSA You Will Not Enter Canada

Written By: Cyndee Todgham Cherniak

Date: Janaury 7, 2018

On December 28, 2017, Canada’s Federal Court of Appeal (“FCA”) issued a significant decision relating to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.  In Williams v. The Minister of Public Safety and Emergency Preparedness, 2017 FCA 252, Justice Stratas (a very good justice who writes well explained decisions) held that currency seized from Mr. Williams should be returned to him because the Canada Border Services Agency (CBSA") did not have legal authorization to seize it.

The facts of this case are important.  Mr. Williams is an American citizen who got made a wrong turn at the Blue Water Bridge and ended up at the CBSA Primary booth (about to enter Canada). When Mr. Williams arived at the Primary CBSA booth, he informed the Primary CBSA officer that “he made a wrong turn and did not intend to enter Canada.” He wanted to return to the United States.  The Primary CBSA Officer proceeded to ask Mr. Williams the usual questions. During the questionning, Mr. Williams failed to report currency that he had with him and converted to $CDN 13,518.50 ($USD 10,758). In fact, he falsely declared to the CBSA that he did not have currency or financial instruments in excess of $CDN 10,000. When the CBSA asked about the bulge in his pocket and counted the money, the CBSA learned Mr. Williams had more than $CDN 10,000 and, therefore, had made a false statement to them.  The CBSA seized Mr. William’s currency of the basis of failure to report and he had not satisfied them that the currency was obtained from legitimate sources.  Mr. Williams filed a request for review.  After a request for review, the CBSA returned $USD 2,020 because it was shown to be from legitimate sources.  The remaining $USD 8,738.00 remained seized as forfeit. Mr. Williams filed an appeal with the Federal Court of Canada.  His lawyers filed a motion for summary judgment, which was dismissed.  Mr. Williams’ lawyers appealed the dismissal of the summary judgment motion to the Federal Court of Appeal.

Justice Stratas wrote a unanimous decision on behalf of the FCA, allowed the appeal and, thereby, granted summary judgment to Mr. Williams.  How is this possible when Mr. Williams did not report currency exceeding $CDN 10,000? The answer is that FCA carefully reviewed the legislation (the Proceeds of Crime (Money Laundering) and Terrorist Financing Act) and focused on an important exception.  Based on the clear wording in the law, the FCA held that Mr. Williams was not required to reprot the currency.

It is improtant to understand the legal provisions.  Subsection 12(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act sets out the general rule relating to reporting of currency and provides:

“Every person or entity referred to in subsection (3) shall report to an officer, in accordance with the regulations, the importation or exportation of currency or monetary instruments of a value equal to or greater than the prescribed amount.”

However, section 13 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act contains an exception and provides that:

“A person or an entity that is required to report currency or monetary instruments may, at any time before they are retained under subsection 14(1) or forfeited as a result of a contravention of subsection 12(1), decide not to proceed further with importing or exporting them.”

The FCA focused on the wording and meaning of section 13.  The FCA looked at the words of section 13 and, in particular the words, “may, at any time before they are retained … or forfeited…decide not to proceed further”.  The FCA held that a traveler may, at any time before the currency is retained or forfeited communicate to the CBSA officer that they will enter Canada and this will give rise to a privacy requirement that results in the person no longer being required to report the currency.  The FCA held that “Section 13 can only mean that once a person expresses a decision not to import, that person need not report [currency] under the [Proceeds of Crime (Money Laundering) and Terrorist Financing Act].” The FCA noted that “the parties agree that to trigger section 13 a person must not only make the decision to not proceed further with the importation or exportation but must state the decision to the border services officer.”  Therefore, for the exception to apply, you have to say something before the CBSA retains the currency/monetary instruments or before the currency/monetary instruments are forfeited to Canada (as a result of a seizure).

As a result, if a person tells the primary (or secondary) CBSA officer that they took a wrong turn or tells any CBSA officer that they do not wish to say the amount of currency and are willing to withdraw their request to enter Canada, they do not need to report currency and the CBSA officer cannot legally seize the currency. A traveler has the option to “opt out” of entering or exiting Canada.  A traveler may also opt out after the primary inspection and before hading the currency to the Secondary CBSA officer for counting.

Justice Stratas also recognized that the traveler is obligated to answer questions truthfully under the authority of the Customs Act and that this obligation is not affected by section 13 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.  A CBSA officer may continue to ask questions about the currency.  The CBSA is just not authorized under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to seize the currency or financial instruments if the person failed to report the currency or financial instruments.
Most travelers who do not know about their obligation to report currency and financial instruments exceeding $CDN 10,000 also is not likely to know that they have the option to express that they will not enter or exit Canada (as the case may be) and, thereby, trigger the exception.  That being said, people say the darndest things and could trigger the exception by what they do say.

Travelers who had had their currency or financial instruments seized may be able to use this case as authority to seek a return of the seized currency/financial instruments.  If the CBSA seizes currency and financial instruments, you can seek a review of that decision within 90 days of the seizure.

If you require more information about requesting a review of a currency seizure, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com.