‘Dirty cash’ seizures on the rise as Ottawa cracks down on money laundering
Last year, border officials reported 1,429 seizures and confiscated $24.5 million of undeclared currency at the border, up almost 30 per cent since 2013.
Last October, Canadian border officials found duct taped packages of more than $1.3 million of undeclared currency in a truck at the Queenston-Lewiston bridge in southern Ontario. The cash was seized as suspected proceeds of crime.
The number of people stopped by border officials and found with undeclared cash is on the rise as Ottawa steps up efforts to crack down on money-laundering by criminal and terrorist groups.
Last year alone, the Canada Border Services Agency (CBSA) reported 1,429 seizures and confiscated $24.5 million, amounting to a 28 per cent increase from 2013, when $19 million was seized in 1,117 incidents.
In addition to the undeclared cash seized, CBSA also took possession of $3.7 million in suspected proceeds of crime last year, twice the amount from the year before.
The money, if the seizure is not appealed by the owner, is forfeited to the Crown as government revenue.
According to data obtained by the Star, Ontario, especially Greater Toronto, is the epicentre of these activities, with travellers in and out of the province accounting for $8.7 million and $9.6 million of the seized currencies in 2013 and 2014 respectively.
Meanwhile, Ontario also got a lion’s share of the suspected proceeds of crime confiscated, $848,979 in 2013 and $2.4 million in 2014.
“Money laundering and terrorist financing are international problems. Money laundering in Canada alone is estimated to be in the billions of dollars,” said CBSA spokesperson Wendy Atkin.
“While currency seizure statistics vary from year to year, the CBSA can tell you that its officers are committed to enforcing Canadian legislation . . . as it applies to the border.”
While observers believe China’s crackdown on corruption in recent years may have contributed to the inflow of so-called “dirty money” into Canada, ignorance and misconceptions also play a role in Canadians failing to declare the amount of cash they’re carrying through the border.
With tighter regulations around reporting such irregularities, Simon Fraser University criminology professor Robert Gordon said, some people may take a chance and carry large sums of cash on them when they travel.
In Vancouver, it’s been reported that some property buyers actually paid for their homes in cash.
“It’s a heavy bag, but it is not impossible,” said Gordon. “Some people from certain ethnic origins do not declare their money in possession simply because (they believe) the banking system is not to be trusted and they are more comfortable working with paper money.”
Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, said CBSA, there are no restrictions on the amount of currency a person can bring into or take out of Canada. However, any amount valued at $10,000 or more must be declared at customs.
The agency’s Atkin said there are four levels of seizure, leading to a fine ranging from $250 to $5,000. However, in cases involving suspected proceeds of crime, no money will be released.
Tax litigator Daniel Kiselbach has seen a 20 per cent increase in inquiries from Canadians desperate to get their seized money back from the government.
Although CBSA has an internal appeal process, he said “redress officers” must be satisfied with the proof given of the source of the money.
“The toughest cases are the ones where the person doesn’t have a paper trail for the money,” said Kiselbach, who had a client fail an appeal to retrieve $100,000 because the proof of the money’s origins was lost.
While money seized might amount to just change for the wealthy, he said what is most worrisome for these people is being put on a watch list for extra scrutiny whenever they travel in the future.
“Some people are afraid the government is going to tax the money if they declare it, but honesty is the best policy,” said Kiselbach, who specializes in customs and trades at Deloitte Tax Law. “If you make your report, nothing will happen and you will be on your way.”
According to CBSA, $6.7 million in undeclared money and $834,144 in proceeds of crime was seized at Canadian ports of entry from Jan. 1 to April 15 this year, including $2.9 million in unreported cash and $127,960 in dirty money confiscated in Ontario — three-quarters of it at Pearson International Airport.
Four levels of currency seizures
Level 1: the currency is returned with a $250 penalty when the money has not been concealed and the individual makes a full disclosure of the facts following its discovery.
Level 2: the currency is returned following payment of a $2,500 penalty when the money is concealed in a method other than a false compartment, or if the individual has already had a previous currency seizure.
Level 3: currency is returned upon payment of a $5,000 penalty when the currency is concealed in a false compartment or if the individual is a repeat offender.
Level 4: there are no terms of release if officers believe that the currency is the proceeds of crime.
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