CBP May Give Importers with New Importer of Record Nos Add'l Scrutiny
Sources at U.S Customs and Border Protection state that importers that get new importer of record (IOR) numbers (either for the first time, or replacing an old IOR)1 may get additional scrutiny from Customs officials.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
New IOR May Indicate Attempt to Avoid Notice by CBP
A new IOR may indicate an attempt to avoid identification or a desire for anonymity, as CBP will not have any records, good or bad, for a new IOR. Without this history, the importer is a new quantity to CBP, and may merit concern.
DDP/LDP Transactions Are a Red Flag
CBP may become especially suspicious of an importer with a new IOR if it is engaged in DDP/LDP transactions. CBP discourages the use of Delivered Duty-Paid (DDP) transactions and Landed Duty-Paid transactions (LDP), and views such transactions as ‘red flags’ that may indicate the involvement of a ‘nominal importer’ that does not have the legal right to make entry and is simply paid to assume that role, so the true importer is concealed.
According to sources, instances of DDP/LDP malfeasance have been found in attempts to undervalue apparel imports or circumvent antidumping (AD) and countervailing (CV) duties on a variety of products.
Any Connections with Bad Actors also a Concern
In addition, CBP may also become concerned if an importer with a new IOR is linked to any known bad actors -- importers or individuals that have already run afoul of CBP’s rules and regulations, even if the importer with the new IOR has done nothing wrong.
CBP Exploring Requiring Brokers to “Know Their Importers”
CBP sources have previously stressed the need for Customs brokers to “know the company they are doing business with,” stating that brokers have a responsibility to take reasonable care to know who their import clients are, and not take directions or documentation from those (e.g. freight forwarders) who do not have a right to make entry.
In fact, CBP has stated that it will consider requiring brokers to “Know Their Customers,” and the Senate Appropriations Committee has recently directed CBP to encourage or require broker “know your customer” programs. In addition, COAC and CBP are considering broker involvement in a more robust importer validation and Power of Attorney (POA) process.
(See ITT’s Online Archives or 12/17/09 news, 09121715, for BP summary of CBP official discussing textile and apparel enforcement, including the use of DDP/LDP transactions.
See ITT’s Online Archives or 04/15/11 news, 11041523, for BP summary on CBP wanting brokers to know their customers, and conduct more vetting before executing POAs.
See ITT’s Online Archives or 08/25/11 news, 11082510, for BP summary of COAC’s work on broker reform, which could include a more robust importer validation program.
See ITT’s Online Archives or 09/12/11 news, 11091208, for BP summary of a Senate Appropriations Committee report on a FY 2012 DHS appropriations bill, that asks CBP to encourage or require brokers to develop “know your customer” programs.)
1According to CBP, an importer of record number can be the importer’s IRS business registration number, or if the business is not registered with the IRS or if there is no business, a social security number. As an alternative, the importer may request a CBP assigned number by completing a Customs Form 5106 and presenting it to the Entry Branch at a CBP port of entry.