CBP Imposing Max Fines for Year-Old Ocean Export Violations, NCBFAA Says

Forwarders are seeing a rise in maximum penalties issued by CBP for violations surrounding ocean shipments that occurred over a year ago, National Customs Brokers & Forwarders Association of America officials said. Joe Brogan, the chair of NCBFAA’s export compliance subcommittee, said CBP officers are increasingly digging up old violations where forwarders submitted incorrect transportation-related information, such as the date of export or the port of export, and have levied penalties higher than $14,000 for a “single occurrence.”

“The officer is going back and dredging up violations that have taken place, or alleged to have taken place, over a year ago, a year and a half ago,” Brogan said during a May 3 panel at NCBFAA’s annual conference. He said one case involved a violation that took place “close to 20 months” ago. “When they talk about timely enforcement, well, that really doesn't fit that category,” he said.

Brogan said NCBFAA has reached out to “address this” with CBP and urged other members who have experienced these penalties to reach out to NCBFAA. “We are looking to sort of understand the issue,” he said. “We want to get that information from the membership to be able to help you, take that to CBP and see what can be done about that.” Brogan said forwarders that receive these penalties will have to take “direct action” to “try to get that mitigated down to the lowest potential amount.” CBP didn’t comment.

NCBFAA is also considering updating its Shipper's Letter of Instruction (SLI) Model to better reflect due-diligence requirements in light of recent U.S. sanctions developments. The association is considering adding a question on the form that would ask whether a customer is owned by an entity that is sanctioned or blacklisted by Treasury’s Office of Foreign Assets Control.

“At the moment, the parties are supposed to already be conducting due-diligence to make sure that they're not doing business with these folks,” but “it's not reflected in the SLI,” trade lawyer Oliver Krischik from GKG Law said during the conference. “And more often than not, it's never raised as an issue when a transaction occurs. And so we're considering adding it to the SLI.”

Brogan said the association is still “working on finessing the language,” but it could eventually require the exporter “to do some additional due diligence and help them avoid a compliance issue, and then [avoid] us having to go back and try to reeducate them or stop the shipment once we have it.”

Krischik said that question should be a “standard” part of the due-diligence process. “At the same time it can be a burdensome due-diligence process, so it puts a lot of burden on the exporter,” he said. “We're trying to see what might be the right solution there.”

NCBFAA’s review of its SLI model was partially spurred by recent U.S. sanctions against Myanmar (see 2104210025, 2104080039 and 2104080026), which could significantly impact forwarders that are “active” in the region,” Krischik said. OFAC sanctioned state-owned companies that “are purported to have their fingers in a number of industries” -- including the transportation, logistics and manufacturing sectors -- that could own a “number’ of forwarding partners, he said. Those forwarders could therefore be sanctioned under OFAC’s 50% rule, Krischik said, which prohibits transactions with any entity owned 50% or more by a sanctioned entity. “It's important for forwarders to conduct due diligence and make sure that their [Myanmar] partners are not owned by any sanctioned entities,” he said.