Building an Effective Internal Compliance Program

Whether it’s spelled out on a single page or makes up an entire manual, a basic compliance program is one where there are internal controls and procedures that implement compliance measures for those laws and regulations an entity must abide by in the day-to-day operation of the business.

Having an effective program is strengthened when there is a culture of accountability in which individuals understand the concept of compliance and their part within the compliance chain.

To be an effective compliance program internal controls and procedures need to be actively implemented and revised with key personnel updated on changes in practices.

 Not only is US Customs interested in seeing an importer’s compliance procedures when being audited or upon application to a voluntary program such as C-TPAT (Customs Trade Partnership Against Terrorism) or ISA (Importer Self Assessment), but it can also play a role in the mitigation of penalties when incidents occur that give rise to such assessments.

Be sure to put together a compliance program that fits your organization, implement it and update it regularly throughout the year.

Top compliance risks should be identified with resources allocated to address them accordingly. A common area of risk for an importer is that within its supply chain. Mitigation of risk can occur by an importer actually knowing where it’s cargo is coming from, who the actual supplier is and where the imported merchandise is going to.

Sounds simple (I know…) but these transactions are not always as clear cut as they would seem at face value.

 Some factors that can make a compliance program appear to be a failure include

·         A failure to tailor and update the program

·         Insufficient training and follow through of personnel

·         Inconsistent enforcement of internal procedures, and

·         An inadequate compliance culture

Questions/comments? Post below or email me at clark.deanna@gmail.com

 

Responsible Supervision Over Employees of Customs Brokers

The Customs Brokers regulations under 19 CFR §111.28 provides for the exercise of responsible supervision by brokers over the transaction of customs business within such business entity or sole proprietorship.

Under the statute, 19 USC §1641(b)(4), responsible supervision and control means that degree of supervision and control necessary to ensure the proper transaction of the customs business of a broker, including actions necessary to ensure that an employee of a broker provides substantially the same quality of service in handling customs transactions that the broker is required to provide.

Factors US Customs looks at in order to gauge whether or not responsible supervision and control had been exercised by a broker lays in its evaluation of certain factors including:

1.      The training required of employees of the broker;

2.      the issuance of written instructions and guidelines to employees of the broker;

3.      the volume and type of business of the broker;

4.      the reject rate for the various customs transactions;

5.      the maintenance of current editions of the Customs Regulations,  the Harmonized Tariff Schedule of the United States, and Customs issuances;

6.      the availability of an individually licensed broker for necessary consultation with employees of the broker;

7.      the frequency of supervisory visits of an individually licensed broker to another office of the broker that does not have a resident individually licensed broker;

8.      the frequency of audits and reviews by an individually licensed broker of the customs transactions handled by employees of the broker;

9.      the extent to which the individually licensed broker who qualifies the district permit is involved in the operation of the brokerage; and

10.   any circumstance which indicates that an individually licensed broker has a real interest in the operations of a broker.

These factors are required to be considered by US Customs when imposing a monetary penalty upon a broker for a lack of responsible supervision and control. [US v. UPS, 686 F. Supp.2d 1337 (2010)]

Therefore, it would be prudent to ensure that oversight of employees with respect to these factors remains high.

Questions/comments?  Post below or email me at clark.deanna@gmail.com