Travellers alert: New law on cross-border cash controls

The Cross-boundary Movement of Physical Currency and Bearer Negotiable Instruments Ordinance (“Ordinance”) will come into operation on 16 July 2018.

The Ordinance, which implements the recommendation made by the Financial Action Task Force, establishes a declaration/disclosure system to detect the physical cross-boundary transportation of large quantities of currency and bearer negotiable instruments (“CBNIs”). The purpose of the Ordinance is to ensure that terrorists and other criminals cannot finance their activities or launder crime proceeds through the physical cross-boundary transportation of CBNIs. 

The Ordinance

The basic applicability of the Ordinance and some of its salient features are highlighted below:-

• Persons arriving in Hong Kong at specified control points[1] or about to leave and are in possession of a large quantity of CBNIs, must make a written declaration of the CBNIs to the Customs and Excise Department (“CED”) using the Red Channel of the Red and Green Channel System.

• CBNI means cash or negotiable instrument, such as bearer cheque, promissory note, bearer bond, traveller’s cheque, money order and postal order.

• Schedule 4 of the Ordinance specifies a large quantity of CBNIs to mean CBNIs of a total value that is more than HK$120,000.

• Persons in transit at the Hong Kong International Airport are exempted from the declaration and disclosure requirement.

• If a person arrives in Hong Kong not via a specified control point or is about to leave Hong Kong, an authorized officer may require the person to disclose whether he/she is in possession of a large quantity of CBNIs. If so, he/she must make a written declaration.

• Where CBNIs are imported or exported on a cross-boundary conveyance, i.e., an aircraft, vehicle, vessel and any other means of travel or transport, an electronic declaration must be made to the CED if the total value of CBNIs in one batch is more than HK$120,000. There are certain exceptions to this rule, such as where the CBNIs are in transit or air transhipment cargo.

• The value of CBNIs denominated in other currencies will be converted to its equivalents in Hong Kong dollars in the manner specified in the Ordinance.

• The Ordinance empowers authorised officers to stop and search persons arriving in or about to leave Hong Kong; stop, board and search cross-boundary conveyances and cargo; and to seize and detain CBNIs found if they are suspected to be crime proceeds or terrorist property.

• Penalties under the Ordinance will be two-tiered. Passengers who are first-time offenders not having previously been convicted of any money laundering or terrorist financing offences and whose CBNIs are not reasonably suspected to be crime proceeds or terrorist property will be required to make a payment of HK$2,000. However, a record of the particulars of the person and the offence will be entered in a register which may be brought to the attention of a court or magistrate in the event of future offences under the Ordinance. All other cases will be subject to criminal prosecution, and the maximum penalty is a fine of HK$500,000 and imprisonment for two years.

The Ordinance does not prohibit members of the public to bring large quantities of CBNIs into and out of Hong Kong. They only need to report if the designated threshold is exceeded. Given the prevalent use of CBNIs in cross-border transactions, travellers in possession of sums larger than HK$120,000 are reminded to make a written declaration to the CED to avoid incurring criminal liability after the Ordinance comes into effect in two months’ time.