PRE-DEPARTURE COMPLIANCE & THE COST OF FAILURE

CBP Compliance Requirements

PRE-DEPARTURE COMPLIANCE & THE COST OF FAILURE

Importers and cargo owners should be aware that the failure to properly file advanced manifest information can lead to liquidated penalties of $5,000 per incident, according to the Customs compliance regulations found in 19 CFR 4.7(e). Nearly twenty years ago, after the September 11th attacks, Customs and Border Protection (CBP) began to make changes in the information the agency required before cargo would arrive in the United States. The agency made several regulatory changes that led to the mandatory filing of Automated Manifest System (AMS) data prior to a vessel’s departure from the last foreign port bound for the United States.

The manifest data, while helpful, was limited to only what appeared on the bill of lading and gave few clues to the underlying trading parties and commodities who specifically caused the transaction, selected the loading location, and had HTS-level data on what was loaded into the containers.

Thus was born the Importer Security Filing or ISF.

Taken together, these two pre-departure filing requirements for ocean freight provided the agency with a full and robust set of data against which to perform targeting for security, contraband, and other trade-related vetting for admissibility.

Because of the importance of both the filing of the data and its correctness, the penalties for misdeclaring, false information or making changes to the manifest are both costly and time-consuming. It also causes the importer to have a negative data point in CBP’s system that could, over time, lead to higher interdiction and enforcement measures to check cargo in transit, adding additional time and delays to already slowed supply chains.

In 2011, CBP published Decision 11-11 laying out the requirements for penalties for late or non-filing of this security and manifest information.

The compliance regulations specifically read:

 

Failure to provide manifest information; penalties/liquidated damages. Any master who fails to provide manifest information as required by this section, or who presents or transmits electronically any document required by this section that is forged, altered or false, or who fails to present or transmit the information required by this section in a timely manner, may be liable for civil penalties as provided under 19 U.S.C. 1436, in addition to damages under the international carrier bond of $5,000 for each violation discovered. In addition, if any non-vessel operating common carrier (NVOCC) as defined in paragraph (b)(3)(ii) of this section elects to transmit  cargo declaration information to CBP electronically and fails to do so in the manner and in the time period required by paragraph (b)(3)(i) of this section, or electronically transmits any false, forged or altered document, paper,  cargo declaration information to CBP, such NVOCC may be liable for the payment of liquidated damages as provided in § 113.64(c) of this chapter, of $5,000 for each violation discovered.”

 

How to avoid CBP penalties for late or incorrect filings?

The errors we see that lead to exposure for importers fall into one of two categories; incorrect information or non-filing of information. The most frequent incorrect information is a wrong container number and/or seal number.

At Future Forwarding, part of our onboarding process with clients is to ensure that the compliance/process of collecting pre-departure ocean shipment information is detailed and the responsible parties at the importer and loading site are aware of their responsibilities.

CBPs Best Practices Guide for CTPAT importers has several suggestions in the area of container security, beginning with taking photographs of the container at origin. The photographs serve two purposes. First, surveying the container in the event there is a shortage or damage at the other side to determine whether the container was in good condition prior to loading. Second, transmitting the photos to Future Forwarding will ensure the correct container and seal numbers as part of the AMS filing.

Second, importers must impress upon their suppliers and loading locations the importance of providing all of the information shortly before or after the container’s loading to provide Future Forwarding time to not only file but confirm that the transmission is accepted error-free and if changes need to be made, time to submit and confirm receipt by CBP of those changes.

Future Forwarding has the experience to help importers meet their compliance needs from the earliest stages of the supply chain with order placement through to final delivery, whether to our Foreign Trade Zone, our customer, or their drop ship recipient. 

For more information including help with securing fully compliant pre-departure filing procedures, contact us today

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