Customs and Smuggling Offences: When It Is a Crime and How It Is Defended

Customs offences and, in particular, smuggling have a peculiarity that surprises anyone facing one of these proceedings for the first time: they are not regulated in the Criminal Code, but in a special criminal statute, Organic Law 12/1995, of 12 December, on the Repression of Smuggling (subsequently amended). As criminal defense lawyers in customs offences, in this guide we explain what conduct this statute covers, where the line lies between an administrative infringement and a crime, how it relates to tax fraud and money laundering, and what the keys to defense are.

A Special Criminal Statute: Organic Law 12/1995

Smuggling is governed by its own statute, not by the Criminal Code, although the general rules of the latter (on intent, perpetration, participation, stages of execution or penalties) apply on a supplementary basis. Organic Law 12/1995 on the Repression of Smuggling sets out a twofold scheme:

• Administrative infringements of smuggling. Conduct of lesser gravity, sanctioned by the customs authority with fines proportional to the value of the goods or of the duties evaded.
• Smuggling offences. Conduct that, by its value, by the nature of the goods or by the surrounding circumstances, reaches criminal relevance and is tried before the criminal jurisdiction.

This statute coexists with the customs legislation of the European Union (which sets the regimes of import, export and transit) and with internal tax law. Hence the same set of facts may simultaneously have a customs dimension, a tax dimension and, at times, a money-laundering one.

What Conduct Smuggling Covers

The statute contemplates a broad range of behaviors. Without being exhaustive, the most common forms revolve around two main ideas: trafficking in restricted or prohibited goods and the evasion of customs controls.

• Restricted or prohibited goods. Importing, exporting, possessing, acquiring or circulating goods whose trade is reserved to the State or subject to prohibition or restriction, without meeting the legal requirements.
• Evasion of customs controls. Bringing goods into or out of the customs territory while evading their presentation to customs or the established controls.
• Defrauding of duties. Manipulating elements of the customs declaration —value, origin or tariff classification of the goods— in order to unduly reduce import duties.
• Diversion of special regimes. Giving the goods a destination other than the one authorized under regimes such as transit, temporary import or free zones and warehouses.

Special mention is due to particularly sensitive goods —drugs, weapons, explosives, dual-use material (with civilian and military applications) or items of historical heritage—, for which the criminal response operates under reinforced criteria and is not, as a rule, made to depend on the economic value of the goods.

The Threshold Based on the Value of the Goods

The question that most often decides the fate of these proceedings is when smuggling is a crime and when a mere administrative infringement. As a general rule, the boundary is set by the value of the goods or the amount of the duties defrauded: below the threshold fixed by the statute, the act is sanctioned through the administrative route; once it is exceeded, it moves to the criminal route.

That general rule has important nuances. For particularly sensitive goods (drugs, weapons, dual-use material), criminal relevance is not conditioned on the economic threshold. And there are, in addition, aggravated forms that raise the criminal response where circumstances such as membership of an organization, the use of specific means of transport or a particularly high value of the goods concur.

For all these reasons, the determination of value of the goods or of the duties evaded is not a neutral matter: it is, very often, the axis of the defense. Establishing that the valuation used by the prosecution is incorrect or inflated may place the act below the threshold and return it to the administrative route.

Smuggling, Tax Fraud and Money Laundering

Smuggling rarely appears in isolation. It is worth distinguishing it from two figures with which it often overlaps:

• Tax fraud. Tax fraud (Art. 305 CP) punishes defrauding the Public Treasury by evading the payment of internal taxes. Smuggling, by contrast, protects the foreign-trade regime and customs revenue. In import operations they may overlap —for example, where undervaluation seeks at once to reduce tariffs and import VAT—, so each tax and each course of conduct must be analyzed separately.
• Money laundering. Profits derived from smuggling may give rise, at a later stage, to money-laundering conduct when they are introduced into the economic circuit while concealing their origin. These are distinct offences, with different protected legal interests, and their possible concurrence requires careful examination so as not to unduly duplicate the criminal reproach.

This interconnection explains why the investigation involves, in a coordinated manner, the Customs Surveillance Service, the Tax Agency (AEAT) and the security forces, and why in frauds affecting the European Union's budget there may be coordination with European bodies.

Confiscation of Goods and Means

A characteristic consequence of these proceedings is confiscation (comiso). It reaches, in the first place, the goods that are the object of the smuggling; but it may also extend to the means of transport used to commit the act —including vehicles, vessels or containers adapted to conceal goods— and to the profits obtained. Confiscation may even be ordered as a precautionary measure during the investigation.

The defense against confiscation involves examining the lawfulness of the seizure and of the search, the chain of custody of what was apprehended and the proportionality of the measure, with particular attention to the position of bona fide third parties —for example, the owner of a vehicle or of goods who was unaware of their unlawful use—.

Lines of Defense

The defense in smuggling proceedings is built on the elements of the offence and on the guarantees of the process:

• Disputing the value. Challenging the valuation of the goods or of the duties evaded in order to place the act below the criminal threshold.
• Questioning intent. Establishing ignorance of the customs rules or a reasonable error, especially for occasional importers or private individuals.
• Examining the evidence. Analyzing the lawfulness of the interception, of the search of the vehicle or container and of the chain of custody of what was confiscated.
• Delimiting participation. Distinguishing between perpetration and participation, and the position of carriers or intermediaries who may have been unaware of the contents or the unlawful nature of the operation.
• Avoiding double sanction. Invoking the non bis in idem principle where the criminal and administrative routes coexist over the same facts.

The settled case law of the Supreme Court offers criteria on the valuation of goods, the scope of confiscation and the distinction from related figures, which should be applied to the specific case.

When It Is Advisable to Act

In this area, acting early makes the difference. The way the operation is documented, the customs declaration submitted and the response to the first requests condition the entire subsequent procedure. If goods have been seized, if you have received a proposed assessment or sanction from the customs authority, or if criminal proceedings have been opened, it is advisable to obtain specialized advice as soon as possible to analyze the value attributed, the nature of the conduct and the possible avenues of defense, without anticipating outcomes.