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Worries that importers could get socked with hefty fines for failing to properly submit a security form about their ocean cargo years after the fact are overblown, according to the U.S. Customs and Border Protection official in charge of the program.
Violations of the Importer Security Filing regulation, which went into effect more than a year ago and which CBP officially began enforcing Jan. 26, 2010, have a six-year statute of limitations. Under the rule, importers must electronically transmit 10 types of data about the shipment a full day before the container it’s in gets loaded on a ship overseas. Importers could be on the hook for liquidated damages of up to $5,000 per filing for late, inaccurate or incomplete documentation -- and up to $10,000 if an amended ISF is filed that has problems.
CBP has said it will take a graduated approach to enforcement and won’t start issuing fines until late in the year as the trade community struggles to adapt to the significant data collection requirements.
Compliance professionals feel anxiety about the possibility that their companies might receive ISF damages for a shipment six years in the past.
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But Richard DiNucci, who heads ISF at CBP, told AmericanShipper.com that the agency will not abuse its legal latitude.
“Our commitment is to deal with those situations as quickly as possible. I understand that the trade doesn’t want those liabilities hanging over them. It doesn’t seem fair. So I wouldn’t anticipate getting into those situations,” he said.
Asked if the statute of limitations language is there primarily to build a case history against a bad actor with a track record of non-compliance or security violations instead of going after a company for specific error on an ISF transaction, DiNucci replied, “That’s a fair interpretation.”
Equally unnerving for importers is that surety companies that provide customs bonds to guarantee compliance will want the liability collateralized. Small companies that buy several single transaction bonds per year might have to offer collateral worth tens of thousands of dollars. Rates for continuous bonds that can cover ISF bonds are also expected to increase.
A customs broker, who is not authorized by his company to speak publicly, said the trade industry wants to limit the potential liability to no more than one year and preferably as short as 90 days. CBP has the ability to make a determination on whether there is a security risk within that period, he said.
The problem with taking months or longer to assess damages is that companies can continue making mistakes that can be easily corrected, resulting in penalties for numerous container shipments, said Albert Saphir, owner of ABS Consulting, in a short white paper about ISF.
An extended statute of limitations also poses a huge recordkeeping dilemma for the international business, he wrote. — Eric Kulisch
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