Lately, a number of clients have called with incident reports involving either the Canada Border Services Agency (CBSA) or U.S. Customs and Border Protection (USCBP) confiscating NEXUS passes from business travelers because the traveler had commercial goods in the NEXUS line/lane. In all cases, the business traveler properly declared the value of the goods and/or their possession of the goods. The infraction was being in the wrong line/lane with their commercial goods.
The CBSA and USCBP remind the business traveler of a short statement in the brochures (NEXUS Membership Guide) about NEXUS privileges that travelers cannot use the NEXUS lane when they have commercial goods. The instructions state:
"If you have any commercial goods in your possession or baggage or on board the vehicle/recreational boat upon arrival in Canada or the United States, you may not use NEXUS in the air, land or marine modes of transportation. Commercial goods are defined as goods brought into Canada or the United States for sale or for any commercial, industrial, occupational, institutional or other similar use and include samples, tools and warranty repair parts."
Personal computers and similar items carried by NEXUS members for their own personal use while on business trips are not considered commercial goods."
One business traveler had a sample of a ware in his briefcase and informed the border officer. One business traveler in the jewelry business returned to Canada with a piece of jewelry and inputted information in the automated kiosk the value of that item. One business traveler purchased business cards overseas (with certain information translated). One business traveler was returning to Canada with banners used in a trade show in the United States. One business traveler was going to a convention in the United States with a box of brochures. All these business travelers had their NEXUS cards confiscated.
I have heard from individuals whose NEXUS cards were confiscated at the border crossing. Some received a letter from the NEXUS program and some do not. Other individuals do not have their NEXUS cards taken at the border and receive a warning letter in the mail. The use of discretion is sometimes at zero tolerance and is sometimes a little more flexible.
Business travelers must be careful because their NEXUS card is a valuable time-saving asset. When in doubt, use the long line up. Using it once is better than having to use the long line up every trip for 7 years. Another option is to courier commercial goods because the customs paperwork will be completed by the courier company.
When a Canadian resident purchases goods outside Canada, they must declare the goods when returning to Canada. When the individual is over the exemption limit ($800 for stays outside Canada exceeding 48 hours, $50 for same day), they must pay applicable customs duties, GST/HST, excise taxes and other imposts and charges.
Many individuals purchase big ticket goods (such as motor vehicles, motor homes, ATVs, sailboats, motor boats, motor cycles, watercraft, etc.) by way of private sale using Craigslist and other Internet-based web-sites where people list stuff they would like to sell. These transactions are legal and provide an opportunity to get big ticket goods for a lower ticket price. However, remember the old saying "if a deal seems too good to be true ..."
Firstly, individuals MUST remember to declare these purchases. When they do not make a proper declaration to the Canada Border Services Agency (CBSA), they risk criminal charges if the value exceeds a certain threshold. it is possible for the CBSA to lay criminal charges for smuggling and for the CBSA to seize the goods. It is costly to defend such errors in judgement.
Even when the individual does declare the purchase, the CBSA may scrutinize these declarations. Often the buyer/importer does not have any documentation from the vendor. The buyer pays cash and does not have any evidence of the price paid or payable. In these circumstances, the CBSA will look on web-sites for a value and it often greatly exceeds what was actually paid.
Even when the buyer/importer has a sales invoice or receipt (or transfer paperwork), the CBSA is skeptical. Many CBSA officers have seen false invoices and, as a result, do not accept private sales invoices without further supporting documentation. What buyers/importers do not realize is that they have the onus of proving what they paid.
I recently had a client who gave the CBSA officers the name and telephone number of the vendor to allow the officers the opportunity to corroborate the price. However, the CBSA officers would not call the vendors based on their belief that the vendors were not a reliable source of supplemental evidence. The CBSA refusing to make a call to the vendors does not happen every time, but it is not a guarantee either. The CBSA officers may believe that the buyer/importer and vendor conspired to falsify the invoice/paperwork and that the vendor would inform them that the buyer/importer paid the amount of the receipt/paperwork.
This is an unfortunate situation for honest individuals who like a good private sale deal. The question is: what can they do to differentiate themselves from the bad guys who lied to the CBSA? This is a hard question to answer.
The CBSA often asks to examine an iPhone or Blackberry or PDA or computer. They do this looking for email exchanges with the vendors about the price. If they find emails concerning a price that is different than what was paid, this will raise red flags. On the other hand, if there an email trail concerning the negotiation of the price, that is helpful. I would recommend that all emails with the vendors be printed and bring a folder to the border. Also include the original listing / offer for sale even though it often is unrealistically high. If you have that information organized and the CBSA does not have to look for it, the CBSA may accept your evidence. That being said, the CBSA may also view an emails as self-serving.
Supporting documentation could come in the form of independent blue book values. Some of these big ticket items are listed in blue books by make and model and year. These third party businesses often include retail prices and values for the goods in good condition. This evidence can be helpful.
Whether goods are in a good condition or in need of repair affects the price. If the goods are not in prestine condition, documentation of the damage is necessary (not that the CBSA will always agree with you on the appropriate discount). I recommend writing a list of deficiencies in the goods/repairs suspected prior to reaching the border. If the vendor will agree to sign the list, then it will demonstrate a mutual recognition. The vendor may wish to indicate that sale is taking place on an "as is" basis so that any new problems do not become their problem. In any event, the list may be more complete if you take a moment before reaching the border. Also, if there is a disagreement, you can leave a copy of your list and obtain an independent third party in Canada to corroborate after importation (such as an appraiser or repair shop).
Where possible, do not pay cash. I say "where possible" because the final negotiation often is based on a face-to-face meeting and a visual inspection of the goods for damage. As a result, it is not always possible to bring a money order or bank draft. Vendors often do not accept cheques because once the goods are gone, it is difficult to get paid if the cheque is bad. I recommend asking if the vendor uses PayPal because the transfer can be verified. That being said, the CBSA may also believe that a cash top-up was given. The fact that these transactions re often cash transactions is the problem with private sales.
There is no magic information that the CBSA will accept with respect to private sales of big ticket items. The more information you have, the better. If you are an honest traveler and run into difficulties with a CBSA officer, ask to speak with the supervisor. Show how you have attempted to bring adequate documentation. Be prepared to give the vendor's information to the CBSA. Be prepared to answer the hard questions. Do not get angry if the CBSA asks questions. Be prepared to agree to disagree, pay the penalty and then appeal after more information can be gathered.
Many NEXUS card holders in the Trusted Traveler Program are not aware that there are electronic forms available on-line that they can complete prior to returning to Canada with their purchases. The declaration process is simplified by the NEXUS Traveller Declaration Card (TDC). Canadian residents who are members of the trusted traveler programs may complete this form to declare goods purchased and/or acquired outside Canada and must give the completed TDC to the Canada Border Services Agency (CBSA). At many land border crossings, there is a secure deposit box in which to submit the completed forms in the NEXUS lane.
The TDC may be completed on-line (and printed in hard copy) or may be completed manually in black pen (the CBSA specifically states a black pen must be used). For more information, please refer to the CBSA web-site.
Please note that the TDC form cannot be used if the traveler is returning to Canada with tobacco products (such as cigars (non-duty paid/duty free, cigarettes (non-duty paid/duty free), cigarillos and tobacco sticks).
I recommend that frequent travelers keep a number of blank printed forms in their glove compartment or in a brief case. The on-line form is downloadable and can be saved on a laptop with the information that stays the same (e.g., name, address, date of birth, identification, etc.). The main difficulty I find with the electronic form is finding a printer when I am traveling.
I should mention that I have clients who have completed and submitted the forms in the secure deposit box. The problem is that the CBSA officer in the NEXUS lane usually did not see them deposit the TDC in the deposit box. It would be helpful to inform the CBSA officer of the deposit of the forms if you are sent for a random secondary inspection as it may prevent misunderstandings.
On February 5, 2013, Canada took a leap forward by tabling in the Senate amendments to the Corruption of Foreign Public Officials Act (CFPOA). Bill S-14 "An Act to Amend the Corruption of Foreign Public Officials Act" was introduced in the Senate. For a copy of the Senate Bill, please refer to www.parl.gc.ca/HousePublications/Publication.aspx
These amendments are long awaited and strengthen the teeth of the CFPOA. These amendments must pass the Senate and then the House of Commons in order to become law.
The CFPOA makes it a criminal offence in Canada for persons or companies to bribe a foreign public official in order to obtain or retain an advantage in the course of international business. The CFPOA has been law in Canada since 1998.
When the amendments to the CFPOA are passed, Canadian businesses will be subject to many of the rules in place in the United States and the UK.
The amendments contain a provision to entrench the nationality principle. The Canadian Government will be able be able to prosecute Canadians and Canadian businesses for bribery undertaken on foreign soil. The Government of Canada will exercise jurisdiction over Canadians and Canadian companies on the basis of nationality regardless of where the offending activity transpired.
The amendments contain a provision to phase out the facilitation payment exception. The CFPOA currently contains an exception that allows payments that are made to facilitate acts of a routine nature by foreign public officials. An example of a facilitation payment is a payment to a customs official to clear goods more quickly. Cabinet will fix a date in the future when such facilitation payments can no longer be made. In other words, there will be one less basis to excuse payments made to a foreign public official.
The amendments clarify that all businesses are subject to the provisions of the CFPOA. The words 'for profit" in the definition of "business" are being removed. This amendment removes an argument that NGOs could use. The amendment also removes an argument that business could attempt that the bribery does not count (is not punishable) if it was not taken in the context of a business venture.
The amendments adds a new books and records offence similar to the U.S. Foreign Corrupt Practices Act. New Section 4 of the CFPOA provides that every person commits an offense who for the purpose of bribing a foreign public official in order to obtain or retain an advantage in the course of a business or for the purpose of hiding that bribery either:
(a) establishes or maintains accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and audit standards;
(b) make transactions that are not recorded in those books and records or that are inadequately identified in them;
(c) records non-existent expenditures in those books and records;
(d) enters liabilities with incorrect identification of their object in those books and records;
(e) knowingly uses false documents; or
(f) intentionally destroys accounting books and records earlier than permitted by law.
This offence will now be punishable by a maximum jail term of 14 years and is unlimited in terms of the amount of a fine.
The amendments also increase the maximum penalty under the CFPOA. The current maximum jail term is 5 years. The new maximum jail term is 14 years.
For more information, please refer to the documents released by the Government of Canada - http://www.international.gc.ca/media/aff/news-communiques/2013/02/05b.aspx?view=d
To date, there have been three convictions under the CFPOA:
- Griffiths Energy International Inc. – On January 22, 2013, Griffiths Energy International Inc.pleaded guilty to a charge under the CFPOA related to securing an oil and gas contract in Chad. Griffiths acknowledged having committed to paying $2 million in cash and millions in shares in exchange for exclusive access to resources in two regions. After providing the Chad government with a $40 million signing bonus, Griffiths was awarded the resources rights. Griffiths will pay a total penalty of $10.35 million.
- Niko Resources Ltd. – On June 24, 2011, Niko Resources Ltd. pleaded guilty to one count of bribery. Niko admitted that, through its subsidiary Niko Bangladesh, it provided the use of a vehicle (valued at $190,984) in May 2005 to AKM Mosharraf Hossain, then the Bangladeshi State Minister for Energy and Mineral Resources, in order to influence the minister in his dealings with Niko Bangladesh. In June 2005, Niko Resources Ltd. paid travel and accommodation expenses for the same minister to travel from Bangladesh to Calgary to attend the GO EXPO oil and gas exposition, and paid approximately $5,000 for the minister to travel to New York and Chicago to visit his family. Niko Resources Ltd. was fined $9.5 million and placed under a probation order, which puts the company under the court’s supervision for three years to ensure that audits are completed to examine the company’s compliance with the CFPOA. The Canadian Trade Commissioner Service has placed a hold on providing services to Niko during the period of court supervision.
- Hydro-Kleen Group Inc. – On January 10, 2005, Hydro-Kleen Group Inc., pleaded guilty to one count of bribery of a U.S. immigration official who worked at the Calgary International Airport. Hydro-Kleen was ordered to pay a fine of $25,000. The U.S. immigration officer pleaded guilty in July 2002 to accepting secret commissions. He received a six-month sentence and was subsequently deported to the United States.
Canada signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) on December 15, 2006 and investors and trade lawyers have been patiently waiting ever since for the Government of Canada to ratify the ICSID . We have been waiting and waiting.
In 2008, the Government of Canada passed legislation that would permit it to ratify ICSID. Trade Lawyers Blog reported on June 13, 2008 that "On March 14, 2008 that Bill C-9 "An Act to Implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention)" reached its final point in Canada's legislative process and received royal assent." Trade Lawyers Blog reported on February 21, 2010 that Canada has STILL not ratified ICSID.
The reason for the delay in ratifying ICSID is that all of the Canadian provinces must also ratify ICSID due to the fact than many matters relating to the conduct of arbitrations in Canada are covered by provincial legislation. While little information is publicly available, it is understood that to date only Ontario, Newfoundland and Labrador, Saskatchewan and British Columbia have agreed to ratify ICSID with the Government of Canada. All the provinces will have to pass implementing legislation.
The Legal Post (Julius Melnitzer) reported on October 2, 2012 in an article entitled "New Brunswick Premier Alward confirms federal pressure to ratify ICSID" that the Government of Canada is putting pressure of the provinces who have not yet agreed to ratify ICSID (Prince Edward island, Nova Scotia, New Brunswick, Quebec, Manitoba, and Alberta).
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