Many countries have enacted legislation to combat money laundering, which is used to avoid lawful payment of taxes or disguise illegal operations. They have based their laws on or copied the U.S. provisions that regulate rules for crossing the border with money or negotiable instruments.
According to the U.S. Customs and Border patrol, “When entering the U.S. in-transit to a foreign destination, you will be required to clear U.S. Customs Border Protection (CBP) and Immigration and Customs Enforcement. If you have ‘negotiable monetary instruments’ (currency, endorsed personal checks, travelers checks, gold coins, securities or stocks in bearer form) valued at US$10,000 or more in your possession a ‘Report of International Transportation of Currency or Monetary Instruments’ form (FinCen 105) must be submitted to a CBP Officer upon your entry into the United States. Forms can be requested from a CBP Officer.”
Monetary instruments that are made payable to a named person but are not endorsed or which bear restrictive endorsements are not subject to reporting requirements.
While it makes sense to restrict people with suitcases full of cash, many people are innocently being caught when buying properties in Mexico. Many avoid this situation by sending checks through FedEx or other overnight courier services that are made out to the seller of a property and therefore do not violate U.S. laws.
Mexico, however, copied the U.S. law but did not differentiate between checks made out to a party and endorsed checks. Any check over US$10,000 dollars must be declared.
This has resulted in Mexico Customs (Aduana) seizing checks sent for the purchase of properties even when made out to the seller, and fining the sender or receiver for failure to declare the check, which can cause delays and extra costs.
As an example, when I request certified copies of judgments from the Los Angeles County Superior Court (they are archived because they are older files) the court requires a check, but doesn’t know the amount. The practice is to fill in the payee, leave the amount blank and put the phrase “Not to exceed $40.00.” The problem is that Mexico Customs will not send my checks, arguing that there is no amount listed on the check, which is true except the check will never exceed $40.00 and never $10,000, obviously.
Another serious danger expats may find themselves in is a rollover of an IRA if their trustee sends a rollover check to their address, either their Mexico address or one of the Laredo mailing services that forward letters to Mexico. This can be dangerous if the rollover check is seized by Mexico Customs. You will then likely blow the 60-day limit, which will result in payment of U.S. taxes and penalties on top of those levied by the Mexican government.
Each year the laws become stricter with fewer people and places accepting U.S. or foreign checks. Mexico Customs is being streamlined and now check almost all packages entering the country, which means the chance of being caught has skyrocketed.
The best practice is to use electronic transfers for payment of large items. Far too many people erroneously assume that the law of their home country is the same in Mexico, causing them to innocently break the law. Europe, the U.S. and Canada all have the same policy on checks and only consider traveler’s checks, endorsed checks or bank checks as cash, not unendorsed personal checks made out to someone else.