Understanding the Rules Before You Transport Precious Metals Oversees Part 2

Fri, Sep 14, 2012 - 9:14am

In my last post, I wrote that there are two sets of rules with which you must be concerned when you move precious metals across a U.S. border:

1. Rules from the Treasury Department requiring that you report certain movements of currency and monetary instruments across a U.S. border. These rules don’t appear to apply to gold and silver bullion or coins, for reasons I described in that post.

2. Rules from the Census Bureau obligating you to make a declaration if the value of certain commodities that you export from has a value that exceeds $2,500. These rules are poorly publicized. However, border officials routinely confiscate precious metals from travelers who aren’t aware of them.

Failure to Make Obscure Census Filing Leads to Confiscation

According to an article in the Houston Chronicle published in May 2010, U.S. Customs and Border Protection (CB&P) officials at Houston’s George Bush Intercontinental Airport seized nearly $160,000 in gold and silver in one month alone. It seems safe to conclude that CB&P confiscates many times this amount at other U.S. border crossings.

What surprised me, however, was that CB&P agents seized the gold and silver because the travelers transporting it failed to disclose their holdings on a U.S. Census Bureau “Shipper’s Export Declaration.” You must complete this declaration when you transport certain “commodities” (including gold and silver) out of the United States if the shipment has a value of $2,500 or more. Failing to file the declaration can result in not only confiscation of the commodities not declared, but also a fine up to $10,000 and possible imprisonment.

Want to comply with the law? Here’s where things get interesting. Go to the CB&P Web site and you’ll find a page labeled “Export Licenses.” It states,

Exports may require a Shipper’s Export Declaration (SED). “The Correct Way to Fill Out the Shipper’s Export Declaration” site provides step by step instructions on how to complete an SED and when an SED is required.

Unfortunately, this instruction manual is nowhere to be found on the CB&P Web site. So, being the law-abiding citizen that you are, you may try to find it elsewhere online. For instance, by Googling “Shipper’s Export Declaration,” I found a document entitled “Correct Way to Fill Out the Shipper’s Export Declaration” on a Web page published by Bradley University.

So, all you need to do is to file this form when you cross the border and you’re compliant, correct? Not so fast! It turns out the instructions in “Correct Way to Fill Out the Shipper’s Export Declaration” are obsolete.

The REALLY Correct Way to Fill Out the SED

In fact, export shipments that once required a paper SED (Form 7525-V) now require an electronic filing via a government Web site called the Automated Export System (AES). Once the AES processes and accepts the Electronic Export Information (EEI) pertaining to your shipment or shipments, it will generate an Internal Transaction Number (ITN). You must post this number as proof of filing on your “loading documents” prior to exporting them. When you leave the United States, a CB&P official may verify the ITN.

I’ve looked over the AES Web site and it’s anything but user-friendly. It’s obviously set up for large exporters with full-time employees who do nothing but complete government forms.

Fortunately, if you use an armored transport service such as Brinks or ViaMat to export your metals overseas, it will generally obtain the ITN on your behalf (but be sure to ask). However, if you want to hand-carry your precious metals across the border, you’ll need to generate the ITN yourself—or try to find an exemption.

The “Baggage and Personal Effects” Exemption

Surely, you might be thinking, ordinary citizens need not comply with these overly-complex regulations, do they?

Well, yes and no.

Buried within the Code of Federal Regulations (CFR), you’ll find Title 15 CFR Part 30. If you have trouble sleeping, try reading these rules. I did one evening and found section 30.35, “Procedure for shipments exempt from filing requirements.”

The procedure for claiming an exemption begins with the rather imposing requirement that:

Where an exemption from the filing requirement is provided in this subpart of this part, a legend describing the basis for the exemption shall be made on the first page of the bill of lading, air waybill, or other commercial loading document for carrier use, or on the carrier’s outbound manifest. The exemption legend shall reference the number of the section or provision in this part where the particular exemption is provided (see Appendix D of this part).

Well, now THAT cleared things up, right?

Moving on to section 30.37(p), you’ll discover:

(p) Filing EEI is not required for the following types of commodities when they are not shipped as cargo under a bill of lading or an air waybill and do not require an export license, but the USPPI shall be prepared to make an oral declaration to CBP Port Director, when required: baggage and personal effects, accompanied or unaccompanied, of persons leaving the United States, including members of crews on vessels and aircraft.

In case you were wondering, a USPPI is a “U.S. Principal Party in Interest.” According to AES Direct, this is “the person in the United States that receives the primary benefit monetary or otherwise of the export transaction.” That’s you, if you’re the person shipping gold, silver, or other commodities outside the United States.

So, on the surface, it appears that the seizures in Houston should never have occurred, if the USPPI victim had the gold and silver in their “baggage and personal effects.” But that’s not necessarily true, either. For instance, personal effects are defined as:

Usual and reasonable kinds and quantities of wearing apparel, articles of personal adornment, toilet articles, medicinal supplies, food, souvenirs, games, and similar personal effects and their containers.

There is no mention of coinage or currency of any kind, much less precious metals. You could certainly claim that the 100 one-ounce gold eagles you have sown into your briefcase are your “personal effects.” However, CB&P agents might view it differently, depending on their mood, temperament, political disposition, or marching orders.

Attorney Carolita Oliveros, with whom I consulted in preparing this post, says that when her clients tell her they want to walk across the border with gold or silver coins or bullion, she advises having the metals insured for 100% of value in case they’re lost, confiscated, or stolen.

So where does that leave you should you want to personally carry gold and silver out of the United States? Well, you can hire an attorney to prepare your SED. Or call an armored transport service.

Or, before departure, you could make an appointment with the CB&P Port Director. Assuming you succeed in actually speaking to that person, ask what policies are in effect with respect to the baggage and personal effects exception at that facility. While you’re at it, make certain that the Port Director agrees that you need not file Treasury Form 105, the “Report of International Transportation of Currency or Monetary Instruments” (CMIR, covered in Part I of this post) need not be filed. Follow whatever instructions provided, and try to obtain a written document certifying your compliance with the rules.

Of course, that’s just the first step. You also need to understand what rules are in effect in the country in which you plan to import your metals, along with every country you transit along the way. Some countries require a declaration, others don’t. Those that require a declaration may require you to pay an import tax. The import tax may be based on the type of metal, the purity of the metal, and even whether the metal is in the form of coins or bullion.

And, if you ever want to import precious metals into the United States, you’ll find an entirely different set of rules applies. Click here for an example.

Be careful. Don’t lose your metals due to poor planning!

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