Tracking Trade

The Logistics Manager at your company hands you a letter.  From the expression on the Manager’s face and the letterhead, you can tell that this is not going to be a short conversation.  The letter is from U. S. Customs and Border Protection (imports), or the Bureau of Industry and Security (exports).  In rather cryptic terms it states that your firm has been selected as a candidate for a possible compliance audit.

The Logistics Manager may have brushed this off saying the company has received the same letter in the past but nothing happen, no audit occurred.  In fact, this is the “X” year in a row that the company has received a letter.  Your predecessor may have rolled the dice and ignored the warning, but you want to make sure that if it happens on your watch, you are ready.  But where should you start?

Welcome to the world of Trade Compliance.  Since Congress passed the Modernization or MOD Act in 1994 the U.S. government has been converting a manual process of inspecting each container of merchandise to a computerized monitoring and auditing system.  The government now has the ability to audit every step in the shipment process to prove “admissibility”.

The possible end result of this audit might be fines, penalties, loss of trading privileges, and perhaps even jail time.  Here are two examples:

1. Your company exports (allows a foreign company to download your software, data, or technology from your website) without an export license.  The potential penalty starts at $250,000 per download!
2. Your company imports from an overseas manufacturer but without declaring all the foreign components that were purchased and incorporated into the finished product.  Customs will look back 5 years at all entries and demand back duties, interest on back duties, fines and penalties.  If they suspect fraud (intentionally reduced import value) jail time may also be included.  Remember that you are liable, not your broker or freight forwarder for everything (more…)