U.S. Customs and Border Protection (CBP) recently issued letters to many major U.S. importers that encourage the recipients to review their recent trade data and CBP’s Informed Compliance Publications (ICPs), and remind them of potential CBP enforcement actions in the case of non-compliance with U.S. Customs laws. Several firm clients have received these letters in the past week. In recent meetings in Washington, D.C. with CBP officials and the Customs bar, we have confirmed that CBP is sending the letters to the top importers that have not been audited in the past ten years, and is targeting companies it views as being at higher risk for Customs non-compliance. CBP officials state that that companies that receive these letters can expect to be subject to a “Focused Assessment” or other CBP audit in the near future.
Most importantly, CBP’s letters contain language informing the importer that future violations “could result in seizure and forfeiture of imported merchandise and/or the assessment of monetary penalties.” We understand that CBP is putting the companies on notice for increased penalties, and for a more aggressive stance by Customs regarding the validity of prior disclosures made during the course of an audit.
CBP indicated that the letters are intended to encourage importers to conduct internal reviews and to file prior disclosures, and that where prior disclosures are not submitted, CBP will recommend more penalties than has been traditionally the case with Customs audits and Focused Assessments in the past. Importers should ensure that their Import Compliance officials are aware of these letters and CBP’s new audit and prior disclosure procedure.
The letters do not have any impact on a company’s existing obligations, as under “reasonable care”, all importers are already legally obligated, among other things, to review Informed Compliance publications such as those provided with the letter, to have robust import compliance programs in place, and failure of such reasonable care has always put the Company at risk of Customs penalties under 19 U.S.C. § 1592. However, it serves as an indication that the company will likely be subject to a CBP audit in the near future.
As a result, companies should ascertain if they have received such a letter, and if so, should start preparing for a CBP audit. Specifically, companies should review their Customs Compliance policies and procedures, and start reviewing the company’s import data to identify any potential compliance failures and penalty risks. All importers are legally obligated to exercise reasonable care with regard to their imports, and CBP believes this reasonable care due diligence is demonstrated through a Customs Compliance Program. In particular, CBP auditors would expect the top importers targeted by these letters to have a robust Customs Compliance Program in place.