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CBP Discusses Broker Due Diligence of Importer Identity

Apr/13150 LIKES

CBP discussed broker due diligence in verifying the identity of the importer of record in the second webinar about its “Role of the Broker” initiative. In the June 21 webinar, “Establishing bona fides,” CBP overviewed the documentation that may establish that the importer of record is a real entity and is in fact the owner or purchaser of the goods being entered. CBP also discussed situations with foreign importers of record, and said they would like to eliminate third-party transfers of power of attorney.

CBP Emphasizes Broker’s Role in Doing Due Diligence

CBP said it is concerned about cases involving undervaluation of merchandise, underpayment of duties, or failure to pay AD/CV duties, among other things, where CBP cannot track down the actual importer of the merchandise. Ports are struggling with cases in which they fall short on revenue and are left without a legitimate party to bill.
As such, CBP is emphasizing due diligence by customs brokers in determining that the importer of record is truly the owner or purchaser of the goods. Some evidence that CBP mentioned during the webinar include:

  • Face-to-face meeting
  • Company articles of incorporation
  • Photo ID, including drivers license or passport
  • Tax returns
  • A negotiable bill of lading (which functions as documented title)

Emphasis on direct communication. In response to a question about whether brokers must have direct communication with the importer of record, CBP said this is absolutely the case, and that it is looking to tighten up these requirements.

No enumeration of documentation in regs. However, CBP said that it is hesitant to enumerate in the regulations the documentation that brokers should ask for to validate importers of record. CBP said the standard of having to exercise due diligence is sufficient, and it will leave it to the broker to look into what satisfied this standard.

CBP Looking at Elimination of Third-Party Transfers of Power of Attorney
CBP also voiced concern over situations where power of attorney is transferred from the importer of record to a third party (for example, a freight forwarder), who then transfers that power of attorney to a broker. Because of the distance this places between the broker and the importer of record, and in light of its concerns, CBP said it is looking to eliminate the ability for a third party to give power of attorney to a broker.
Heightened Interest for DDP Shipments
CBP said that in cases of Delivery Duty Paid (DDP) shipments with a foreign importer of record, the problems CBP faces are even more acute. As such, CBP’s interest in documentary evidence establishing the identity of the owner or purchaser is heightened in these cases. The importer clearly needs to have direct communication with the importer of record, CBP said, because the broker cannot know the transaction value based only off of the invoice. If brokers having these kinds of communications, CBP said, then brokers should also ask questions to see whether the entity is actually the importer of record.
Some questions asked whether CBP is looking to do away with foreign importers of record altogether, but CBP said it will have to allow it because of commercial necessity. CBP did, however, say that it is looking to “tighten” up requirements for foreign importers of record.