Why do tourists have to declare $10,000 or more entering some countries?
I understand why you'd need to declare other things, but I'm not sure why money should be investigated. Why do countries have such laws in place?
I'd like to add that often all transactions above $10,000 must be reported. It's just that one done via banks are usually reported to authorities by bank while cash transactions must be reported by individuals.
This requirement is usually in place to combat money laundering and tax evasion. The Financial Action Task Force on Money Laundering, an international organization, has a series of recommendations for countries to fight money laundering, including Recommendation 32—"Cash Couriers":
Countries should have measures in place to detect the physical cross-border transportation of currency an d bearer negotiable instruments, including through a declaration system and/or disclosure system. Countries should ensure that their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are suspected to be related to terrorist financing, money laundering or predicate offences, or that are falsely declared or disclosed.
While there are legitimate reasons to carry large amounts of cash across international borders (the limit for what can be carried without a declaration varies from country-to-country), there are plenty of illegitimate reasons. With the increasing availability of low-cost international transfers, the reasons to carry that much cash are increasingly few.
Requiring a declaration means the country has records of what cash is coming in and out, records that can be searched to look for suspicious behavior. And anybody who fails to declare cash is inherently going to be under suspicion. In this way, currency declaration laws create a "predicate crime," where the authorities can investigate and prosecute the failure to declare without having to prove another offense or an illegal use for the funds.
"While there are legitimate reasons to carry large amounts of cash across international borders..." I'm going to beg to differ. There is no legitimate reason for carrying cash across international borders, especially not large amounts. You can do a wire transfer for a fee much smaller than what anyone reasonable would assess the risk of carrying that much cash at.
@R.. You can't do a wire transfer to yourself in a foreign country if you don't have accounts set up in that country. And countries can have failures of their ordinary financial systems such that pretty much all you can count on is cash.
@R.. In addition to David's point, there are also legitimate reasons that aren't necessarily good reasons. Distrusting banks and liking the feel of cool hard cash are perfectly lawful reasons to carry around large amount of cash, even if it's not how I'd recommend somebody travel. Maybe you're going somewhere with an essentially non-existent banking system. Or maybe your relative overseas died and left you a bunch of Krugerrands. I use "legitimate" in the sense of "not associated with criminal activity," not that it's always recommended, advisable, or reasonable.
There are quite a few countries where US dollars are highly preferred over the local currency for many reasons (like high inflation rates or distrust of the government that has declared denominations invalid in the past without compensation) and where it is not possible to withdraw US dollars at all or only at artificially bad "official" exchange rates. Every tourist guide will tell you to bring your own US dollars with you. Which could add up if you're traveling with a family.
@ZachLipton: By "legitimate" I didn't mean "lawful" but rather "justifiable" in a sense of a reasonable person making an assessment of risk and choices based on that assessment rather than based on conspiracy-theorist paranoia and whatnot.
@ErwinBolwidt: It's going to be a net loss if you pay for insurance that will cover the loss or theft of your cash. If you don't, you're just being stupid, especially if traveling with a family. Either the amount is significant enough that you'll be utterly screwed if you lose it, or you have so much money that it's stupid to be trying to save the difference.
Border crossings are often used in money laundering. Sure, you could be doing it with $100, but it's probably not worth your while. They have to set a point at which it warrants more investigation. That's a handy round figure that is more than most people will bring in for a holiday, is easy to calculate if you're above or below (usually), and stands out visually.
From Australia's forms:
Cross-border movements of AUD10,000 or more of physical currency (or the equivalent in foreign physical currency) must be reported to AUSTRAC under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
Note that the reporting often must be made twice: once to the country you're leaving, and again to the country you are entering.
Just to be clear, there are no limits to the maximum amount of currency you can carry across the border (in either direction, while entering or exiting a country).
The only requirement is:
Any amount above USD 10,000 (or equivalent) must be declared; and you must show proof of where you got the funds.
If the source of funds cannot be determined to be legitimate; then you may be suspected of money laundering.
Money laundering is not related to funding terrorism, although the two are often conflated these days.
Laundering of funds has been around as long as there has been illegitimate businesses.
However, a large majority of money is laundered specifically for the financing of (or as proceeds of) terrorism; which is why they are now linked.
I realise it's not a brilliant source, but it looks like there are still a few countries exercising currency controls https://en.wikipedia.org/wiki/Foreign_exchange_controls#Current_countries_with_foreign_exchange_controls
"_a large majority of money is laundered specifically for the financing of (or as proceeds of) terrorism_"? Do you have a reference for that? I would think it's more often related to tax evasion than terrorism.
@jcaron the form I linked to in my answer from the Australian govt mentions it too.