The Federal Court of Appeals of Rosario, Chamber B, in the case: “FIM del C.; LCS s/ Violation of Law 22.415”, dated 17/02/2017, allowed two travelers that after being searched by Airport Security Police Personnel corresponding to the Rosario International Airport "Islas Malvinas", to extract from the country the sum of US$ 80.000.
Although Decree 1606/01 prohibits the export of sums greater than US$ 10.000, the reasoning for not ordering confiscation was the following: "The automatic application of the figure of confiscation cannot be sought, equating the extraction of a sum greater than US$ 10.000 to the export of absolutely prohibited merchandise such as narcotics or firearms."
Introduction
Our legislator, aware of the prevailing reality, imposed a series of restrictions on the entry and exit of foreign currency following a pronounced institutional, political and economic crisis that began in the 2000s.
The aim was to optimise control over physical cross-border cash transport.
The first regulatory precedent arises with Decree No. 1570/2001. It follows from this that the prohibitions on the outflow of foreign currency were instituted for a specified time and while they are considered necessary, however, over time they became entrenched in our regulatory system, since the general resolution AFIP-DGA 2705 of 5/11/2009 maintained the aforementioned prohibition that will be explained below.
Well, there is no reason to believe that the ban, which was in place for a specific period of time, will be revoked; on the contrary, according to the monetary and exchange rate policy of successive democratic governments, they all agreed to maintain it with different nuances. However, the hesitations do not arise from the legislative technique - which is clear and precise - but from those in charge of interpreting and applying the rules.
In this regard, the judiciary in the ruling that brings us before issued a decision incompatible with the normative complex cited, setting an unprecedented precedent in terms of the comparison it draws to justify its reasoning lacking legal support.
In short, what is necessary and for a certain period of time, as conceived by the power with legislative powers, is indifferent and disdainful for the judicial power, when it, by order of our Magna Carta, must ensure compliance with the norm and its application to the specific case.
The conflictive pragma
On 07/11/2007, while carrying out pre-departure checks on a Lan Chile flight from Rosario International Airport “Islas Malvinas”, Airport Security Police personnel informed members of the AFIP-DGA that two passengers were carrying a large amount of cash.
Indeed, when questioned by the shift manager, they stated that the sum they were carrying was US$80.000. After the search, US$88.100 was found; one of them was carrying US$36.200 in a fanny pack attached to his body, while the other traveler was carrying US$51.900 in an anatomical belt around his waist.
In order to prove the legitimate origin of the money, they presented two public deeds in which two sales contracts were drawn up.
For its part, the intervening authority gave the amount of US$ 10.000 to each passenger and seized the sum of US$ 68.100.
Based on the stated circumstances, the AFIP-DGA, through the Customs Administrator, issued a resolution dated February 14, 02, to sentence the travelers to pay a fine of $2008 (this amount being the value corresponding to one times the market value of the seized merchandise), and to confiscation of the seized merchandise, with the excess seized dollars being applied to the payment of the fine.
Theory of the plaintiff's case
Once the factual platform was established, both travelers filed an administrative lawsuit against the National Customs Administration, Rosario Delegation, in order to revoke the resolution, absolve them of the charges and consequently order the return of the cash.
Alternatively, they requested a reduction of the fine to an amount less than the minimum established for the infraction charged, thus nullifying the confiscation ordered.
The arguments outlined are based on the fact that money is not merchandise, therefore, the rate provided for in art. 979 of the Customs Code is not applicable. They also maintain that the sum of dollars was duly justified, and for strict security reasons it was kept among their belongings.
On 18/12/2015, the a quo resolved to reject the claim filed, with costs to the plaintiff, partially confirming the administrative resolution, reducing the amount of the fine to 25% of its value, confirming the confiscation of the merchandise.
Both parties appealed against this decision. The defendant complained about the reduction in the amount of the fine imposed by customs and requested that it be revoked, confirming the administrative ruling in totum, with costs to be borne by the plaintiff in the second instance.
Regulatory complex applicable to the case
The legal provisions applicable at the time of the incident were reviewed by Chamber “B” of the Federal Court of Appeals of Rosario, responsible for resolving the parties’ challenges.
The judgment in question rightly maintains that the alleged conduct is covered by Article 979 of the Customs Code, within the violations of the baggage regime. The reviewing court confirms the aforementioned charge.
The cited provision states: “1. Any traveler of any category, crew member or any person who removes or attempts to remove from the customs territory by way of baggage or parcel, as the case may be, merchandise that is not admitted as such by the respective regulations, will be sanctioned with a fine of ONE (1) to THREE (3) times the customs value of the merchandise in violation.. 2. In the event provided for in section 1, if the export for consumption of the infringing merchandise is prohibited, its confiscation shall also be applied.”
Thus, the removal or attempted removal of goods by means of baggage or parcels, which are not permitted as such by the respective regulations, is criminalized. In other words, what is punished is the inappropriate means by which the goods are attempted to be removed.
In the case before us, the defendants, within the framework of customs regulations, were carrying the money under the baggage regime (articles 488 et seq. of the Customs Code). This special regime is defined in article 489 of the aforementioned digest as follows: “Baggage includes any new or used items that a traveller, taking into account the circumstances of his trip, could reasonably use for his personal use or consumption or as gifts, provided that the quantity, variety and value do not allow us to presume that they are imported or exported for commercial or industrial purposes.”
In another order of things, the prohibition regarding the extraction of foreign currency is contemplated by Decree No. 1606/01, in its art. 3, which replaced art. 7 of Decree No. 1570/01 with the following: Art. 7: “The export of foreign banknotes and coins and precious metals is prohibited, unless they are carried out through entities subject to the SUPERINTENDENCY OF FINANCIAL AND EXCHANGE ENTITIES and previously authorized by the CENTRAL BANK OF THE ARGENTINE REPUBLIC, or are less than TEN THOUSAND UNITED STATES DOLLARS (US$ 10.000) or its equivalent in other currencies, at the selling exchange rate of the BANCO DE LA NACION ARGENTINA”.
Is money a commodity?
Customs legislation in its art. 10 defines merchandise as “any object that is capable of being imported or exported.”
The decision-maker leans without hesitation towards the dominant thesis, which is that money constitutes merchandise.
In order to justify his reasoning, he argues that foreign currency is classifiable under tariff item 49.07.00.100, section D, as a “banknote” (PEN Decree 509/2007) (Official Gazette of 23/05/2007), on the Common Nomenclature of Mercosur.
This position of considering money as merchandise is the one that the Office of the Prosecutor for Economic Crime and Money Laundering (PROCELAC) of the Public Prosecutor's Office of the Nation, an organization that has direct and specialized influence in the prosecution and legal treatment of customs crimes, has aligned itself with.
In the case before us, the defendants, within the framework of customs regulations, were carrying the money under the baggage regime (articles 488 et seq. of the Customs Code). This special regime is defined in article 489 of the aforementioned digest as follows: “Baggage includes any new or used items that a traveller, taking into account the circumstances of his trip, could reasonably use for his personal use or consumption or as gifts, provided that the quantity, variety and value do not allow us to presume that they are imported or exported for commercial or industrial purposes.”
Grounds for the judgment
To a large extent we have outlined the premises on which the Court's decision is based.
EFirstly, the typical elements of the infringement provided for in art. 979 of the CA were proven in the proceedings, as the attempt was made to withdraw from the country an amount greater than US$10.000 per person, without doing so through entities subject to the Superintendency of Financial and Foreign Exchange Entities, nor did they have prior authorization from the BCRA.
Secondly, it concludes that the money constitutes merchandise. Consequently, it considers the fine imposed on the accused to be applicable to the sub-examine.
Now, what decision should the judiciary adopt regarding the confiscation of foreign currency?
The court considers that the plaintiff is right regarding the inadmissibility of confiscation as an accessory penalty provided for in section 2 of article 979.
To decide, settle the issue in the following two paragraphs, which are transcribed below:
“It is therefore necessary to determine what the regulation refers to when it refers to “prohibited merchandise”. Understanding that this would be all merchandise that does not constitute luggage (art. 490 CA), would lead to the conclusion that all “merchandise that is not admitted as luggage” should be confiscated.” (sic)
“If this is the position taken, section 2 of the rule would become automatically applicable in all cases in relation to the configuration of the infraction, which I believe would be meaningless since it would dilute the differentiation that the same law makes when mentioning in section 1 the “merchandise that is not admitted” in such capacity, while in section 2 it refers to the “prohibited” in order to apply the aggravation of the penalty with the confiscation of the merchandise … The automatic application of the figure of confiscation cannot then be sought, equating the extraction from the country of a sum greater than US$ 10.000 to the export of merchandise that is absolutely prohibited for reasons of harmfulness or danger, such as, for example, narcotic substances or firearms, among others.” (sic)
Conclusion: Disregard for the Law
It is crystal clear that the ruling ends up establishing disvaluable legal effects, since it is enough for any person to invoke the grounds of the judgment under analysis to justify his action; thus, with the objective of extracting from the customs territory a sum greater than ten thousand dollars, regardless of -by way of example- that said money is the result of criminal practices such as: money laundering of criminal origin, financing of terrorism, drug trafficking, etc., since, in any case, the confiscation of the same would not be applicable.
It arbitrarily ignores, without even mentioning, that Decree No. 1570/01 and its amendments establish an unquestionable “economic prohibition”. Note that the Executive Branch has the power to execute monetary and exchange policy as authorized by the CA in art. 609, subc. b.
The economic prohibition established by the aforementioned Decree is clearly clear and precise. The Customs Code regulates prohibitions in a generic manner in its Section VIII. As it arises from the explanatory statement of said body, the term “prohibitions” designates direct restrictions, adding that the Code does not specifically establish any prohibition, but that they “must arise from the legislation that corresponds to the matter in question.”
The author's opinion regarding the infringement provided for in art. 979 of the CA states: "The various infringements described in this chapter are true blank penal norms, since although they establish a sanction, the precept is indeterminate, in its content, and must be integrated by other norms."
In this regard, since Article 979 is a blank criminal law, it must be inseparably harmonized with the Decree that establishes the economic prohibition in question. Therefore, the confiscation of foreign currency is appropriate.
It should be added that, even though art. 59 of Decree 1001/82 (regulation of the Customs Code) does not include money as an asset excluded from the baggage regime, it must be understood that, due to the aforementioned PEN decrees, its entry or exit has been subject to the current restrictions.
In short, the criterion followed by jurisprudence has been diametrically opposed, since it affirms the "impossibility of equating" the export of narcotics or firearms with foreign currency, when, strictly speaking, all of them are prohibited under certain conditions.
Narcotic substances or firearms may also be included among the non-economic prohibitions provided for in art. 610, which are not exhaustive. However, it is worth noting that they are expressly prohibited from the baggage regime by virtue of art. 59 of decree 1001/82.
In short, the ruling is arbitrary as it clearly contradicts the current legal system. Furthermore, it undermines the legislative policy that carefully regulates the matter.
By: Christian F. Anderson, Attorney at Law
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