Essential Components to US Customs Compliance

This article is designed to help importers identify possible problem areas in their operations. Following its general guidelines does not ensure compliance with all pertinent Customs requirements.

The United States government considers importing a privilege and not a right. Considerable penalties can be assessed if importers violate applicable laws and regulations. In extreme circumstances, the United States Customs and Border Protection (CBP) can suspend or revoke the privilege to import for failure to comply with the requirements it enforces. Implementation of periodic internal reviews and an import compliance program specifically tailored to an importer’s operations will drastically reduce its exposure to adverse Government action.

If you’re an importer, then the United States Customs Service CBP is aware of you and your importations. Risk, costs and disruptive surprises are reduced for those importers who are prepared. Our practice includes counseling importers on compliance issues; conducting internal audits (by the same methods as Customs auditors use), preparing manuals, employee training and remediating violations. We also represent a wide variety of importers who waited until named in an enforcement action before considering the importance of U.S. Customs compliance.

IMPORTING BASICS: CUSTOMS COMPLIANCE

The United States Customs and Border Protection, (CBP), in the Department of Homeland Security, regulates the importation of merchandise in the United States and enforces all applicable requirements including those of other Federal agencies. The current trade environment focuses on the safety and security of cargo entering the United States. Increasing scrutiny of all shipments is expected to continue. CBP knows that most established importers have proven that they are relatively compliant. Their shipments clear without much scrutiny. CBP resources focus on new and unknown importers. Therefore, CBP discovery of your noncompliant importations is extremely likely. The Customs Modernization Act of 1994 (“Mod Act”) imposed considerable obligations on importers in the United States, which were previously the responsibility of Customs. Importers now face significant penalties if their products, entry documents and supporting records are not fully compliant with Customs regulations. This pamphlet is designed to inform importers and other members of the trading community about certain United States import requirements that are frequently violated.

The Automated Commercial Environment (ACE) is the electronic system through which most importers submit information to CBP. Participation in ACE is voluntary and requires Automated Broker Interface (ABI) software. (19 CFR 143.31 (2019)). CBP still accepts paper documentation. The information that each importer is required to report remains the same whether it is transmitted electronically through ACE or delivered on paper.

The Mod Act also allows for the increased use of electronic data transmittal, which is intended to result in fewer examinations and faster cargo clearance. The downside is that when Customs discovers violations, it is likely to impose harsher penalties.

ESSENTIAL CONCEPTS

∙ Importer of Record - A company or person must be designated as the “importer of record” for each shipment of merchandise that arrives in the United States from any point outside the Customs territory of the United States. The importer of record is primarily liable if the merchandise, underlying transaction or supporting records violate Customs regulations. The importer of record must use “reasonable care” to ensure that its merchandise and import operations are compliant with U.S. Customs regulations and other requirements that CBP enforces. Using the services of a Customs broker will not relieve the importer of record of its responsibilities.

∙ Reasonable Care - The “importer of record” must be able to provide support for all statements and information reported to CBP. The required degree of support varies by issue, transaction and circumstances.

∙ Shared Responsibility and Informed Compliance - The “importer of record” and CBP share the responsibility for compliance with laws and regulations. The importer is responsible for reporting correct, complete and accurate information. CBP is responsible for informing the importer of its rights and obligations.

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