On May 14, 2014, Mr. Craig Clark, Importer Security Filing (ISF) Program Manager for Customs and Border Protection (CBP), met with members of the trade community in Newark, New Jersey. Mr. Clark's presentation was held under the auspices of Avalon Risk Management and the New York/New Jersey Foreign Freight Forwarders and Brokers Association, Inc.
CBP has processed over 10.5 million Importer Security Filings from approximately 2,500 filers and 264,000 importers. The compliance rate is about 90%. CBP issued guidelines for enforcement of ISF fines and penalties on July 9, 2013. Mr. Clark's comments were to inform the trade community of new guidelines that went into effect on May 13, 2014. The new phase of enforcement strategy is to be final as of May 13, 2015. CBP has also updated the FAQ section of their ISF policy on their website to highlight the new enforcement strategy. More detailed information can be found in the FAQ.1
Some fines and penalties have been issued by the ports since July 9 of last year; however, as of May 13th, CBP has "hit the reset button" on these penalties. Except in cases of fraud or criminal activity, CBP will not be approving liquidated damages claims for violations before May 13, 2014.
In the future, CBP will issue three warnings. This informed compliance outreach may be by e-mail, telephone or letter. The fourth will result in pine and penalties. Fines will be issued for egregious violations, significantly late filings and repeated violations. However, the exact definitions of egregious, significant and repeated will be left up to the individual ports. Local discretion will allow each port to make decisions based on infrastructure or staffing resources. For example, some ports may elect to hold freight rather than issue a penalty. In this regard, all importers are urged to continue to monitor the pipelines from their specific ports of entry.
All fines and penalties issued by the ports will continue to be reviewed by Headquarters. Headquarters will continue to take a measured and common sense approach. CBP plans to issue all fines and penalties within six months of the violation but reserves the right to issue liquidated damages up to the statutory limit six years.
CBP will allow for mitigating factors as provided for in the Federal Register notice of ISF implementation of November 25, 2008.2 In his comments, Mr. Clark specifically mentioned C-TPAT membership as a mitigating factor. CBP understands there may be certain factors outside of the Importer of Record's control such as changes to the bill of lading made by the carrier.
CBP will use an internal national database to monitor violations. The database will allow individual ports visibility to other ports nationwide. This will allow CBP to identify locations and specific importers where enhanced compliance outreach is required.
Importers should monitor the status of their ISF entries. No bill match equals no filing in the mechanical eyes of Custom's computer. While fines and penalties will not be issued until next year, containers arriving with no filing (no bill match) will be subject to examination. The implication is that CBP will not prioritize these examinations. Depending on the merchandise and the need for it, this could actually cost the importer more than a $5,000 penalty to be imposed in the ISF enforcement guidelines. Also, while CBP has repeatedly stated that ISF data will not be compared to the customs entry data at the time of entry, it may be compared during an examination. To date, the largest number of cargo holds has been on the West Coast and Norfolk. Currently only about 1% of containers are being held.
It is important to know that amendments, particularly bill of lading amendments, may be made up to the time of arrival and in some cases after arrival. Amendments do not reset the clock in terms of timeliness. Timeliness for amended entries will be based on the original filing.
This new enforcement policy will apply only to ISF-10 filings. ISF-5 violations are not currently being enforced pending changes to the regulations.
Mark Kopp is currently the Senior Manager for Import Compliance for Yusen Logistics (Americas) Inc. Mark has over 30 years experience in all aspects of supply chain management and compliance - from product development and buying, cargo management and shipping, customs brokerage, to warehousing, distribution and retail sales. He has managed/directed imports for Kinney Shoe Corporation, Woolworth Corporation, Russ Berrie & Co. and DHL. He has also served on the Footwear Distributors & Retailers of America government customs council, been a member of the Board of Directors for the Toy Shippers Association, and been an instructor at The World Trade Institute in New York. Currently, he is a member of the NY/NJ Freight Forwarders & Brokers Association and serves on the American Apparel & Footwear Association Government Relations Committee. Mark graduated from Franklin & Marshall College in Lancaster, PA with a B.A. in Political Science.