Recently by Mark Nestmann: Federal Court Tells Frustrated Annuity Investors to ‘GetLost’

An article from a Mexican newspaper reports that Mexican federal police seized more than 150 gold coins from a traveler in the Mexico City International Airport. The seizure apparently occurred last year; the article is dated April 19, 2010.

The traveler, a U.S. citizen named Thomas Martin, was on his way to Panama when police detained him. The article doesnt specify the legal rationale for the seizure. However, Mexican law requires a customs declaration of cash or cash equivalents entering or leaving Mexico with a value exceeding $10,000. Martin evidently failed to make this declaration.

Mexican federal police routinely examine the carry-on luggage of outgoing international passengers to destinations south of Mexico (e.g., Panama). This is apparently how they found the coins. Carry-on luggage on even some domestic flights is scrutinized, as my colleague P.T. Freeman explained in a blog entry last year.

The article also doesnt describe what coins police seized, except that they were manufactured in the United States and South Africa. This implies the coins were U.S. eagles and South African Krugerrands. In the photo accompanying the article, all the coins appear to be one ounce in size.

We also dont know where Martin began his flight to Panama. If his journey originated in the United States, there would be no apparent reason to transit Mexico. There are direct flights to Panama from Houston, Miami, and other U.S. cities. Its possible that Martin simply walked across the border at one of the numerous U.S.-Mexico entry points, and then booked a flight to Panama through Mexico City at the nearest airport. Entering Mexico this way generally avoids any outbound inspection by U.S. customs, or inbound inspection by Mexican customs. Authorities in both countries have the right to inspect the bags of a pedestrian entering Mexico from the United States, but usually dont bother.

Even absent an outbound customs inspection, Martin would still have been required to file Census Bureau Form 7525-V, since the market value of the metals exceeded $2,500. He probably wouldnt be required to file Treasury Form 105, because the legal tender value of the coins apparently didnt exceed $10,000. Failure to file these forms, when required, can lead to confiscation of the reportable goods, along with possible fines and even imprisonment.

Should Martin have somehow avoided having his coins seized in Mexico, he might have faced problems upon his arrival in Panama. To import this quantity of gold (or any other merchandise with a value exceeding $2,500) into Panama, hed need to hire a customs broker in advance of his trip. The customs broker would then appraise the value of the shipment and arrange with the importer (Martin) for payment of Panamanian goods and services tax (7%). Its possible Martin did this, but he may have planned to smuggle the coins into Panama without declaring them. Of course, he never got that far.

Moving money internationally is serious business, especially if youre transporting cash, gold or other valuable items yourself. You need to educate yourself on the rules that apply and the traps into which you might run. Thomas Martin apparently failed to heed this advice, and it cost him $200,000. (If he had read P. T. Freemans blog entry, hed have known better!)

Have you moved gold or other precious metals into Mexico or Panama? What were your experiences? Please post a comment!

Reprinted with permission from The Sovereign Society.

Mark Nestmann is a journalist with more than 20 years of investigative experience and is a charter member of The Sovereign Society's Council of Experts. He has authored over a dozen books and many additional reports on wealth preservation, privacy and offshore investing. Mark serves as president of his own international consulting firm, The Nestmann Group, Ltd. The Nestmann Group provides international wealth preservation services for high-net worth individuals. Mark is an Associate Member of the American Bar Association (member of subcommittee on Foreign Activities of U.S. Taxpayers, Committee on Taxation) and member of the Society of Professional Journalists. In 2005, he was awarded a Masters of Laws (LL.M) degree in international tax law at the Vienna (Austria) University of Economics and Business Administration.

The Best of Mark Nestmann