The security of our borders has been under scrutiny for the past several months.
Although much of this increased attention has been paid to our Southern border, the Buffalo Niagara region and its border with Canada (which happens to be the longest in the world) is experiencing new levels of trade security.
Customs and Border Protection – advancing from informed to enforced compliance:
To support its mission of securing our borders, Customs and Border Protection (CBP) has announced a stricter enforcement plan for importer security filing (ISF) requirements, and has outlined a detailed approach that includes issuing monetary liquidated damages for non-compliant importers.
What is an Importer Security Filing?
The ISF is a mandatory filing with CBP of specific shipment data elements, used for security and targeting, commonly referred to as 10 + 2. The ISF must be submitted at least 24 hours prior to loading cargo on to a vessel at the foreign port by the importer or his/her agent.
Previously, Customs at local ports of entry recommended that liquidated damages be issued for ISF violations. However, CBP headquarters has been reluctant.
As an initial step, Customs has decided to wipe the slate clean of any known violations, although this does not preclude Customs from acting on fraudulent or criminal activity.
Customs’ enforcement plan includes local port discretion and a “three strikes, you’re out” rule.
Similarly, Customs plans to use a national database to track and advise importers of repeated violations. After the third violation, there will be no exceptions and liquidated damages will be assessed.
This process will change on May 13, 2015, at which point liquidated damages will be assessed upon the first violation and the “three strike rule” will not be applicable.
What are liquidated damages?
Liquidated damage is a monetary claim issued against the importer bond for failure to comply with Customs laws and regulations.
CBP may issue liquidated damages up to a maximum of $5,000 per violation for the submission of an inaccurate, incomplete, or untimely ISF.
An importer or their agent may file a petition outlining mitigating or aggravating circumstances and pay a lesser amount if CBP determines that law enforcement goals were not compromised.
Examples of mitigating circumstances include:
- demonstrated steps to improve compliance
- progressive improvement in compliance rating
- circumstances outside the importer’s control
- a marginal error rate based on overall volume
- C-TPAT status (Customers-Trade Partnership Against Terrorism)
Guidelines for mitigation for the first violation is $1000 – $2000, and $2500 for subsequent violations. C-TPAT members will receive an additional 50 percent reduction.
About the author: Damon Piatek, an eight-year Partnership member and current board member, is Co-Owner, President and CEO of Welke Customs Brokers USA, Inc. He is also a Licensed U.S. Customs Broker and Customs Compliance Specialist, and has over 18 years of experience in the import/export, customs, transportation and logistics sectors. Click here to read his blog post in PDF format.
Want to learn more about logistics and how to get involved in our Transportation/Logistics Council? Contact Bryan Roth.