Best Practices During a Customs Audit/How to Ensure You Have a Compliant Operation

Effective Post-Entry Processes for Maintaining Compliance with U.S. Customs in Global Trade

Compliance audits conducted by U.S. Customs can be a daunting prospect for any business engaged in global import and export trade. Mitigating the risk of a failed compliance audit should be a priority for organizations seeking to run a compliant operation. The key to a compliant customs audit is to remain organized in post entry processes. Ensuring comprehensive document management, process accuracy, and visibility into import data are critical steps along the path to a successful compliance audit.

What are the standard requests during a CBP compliance audit?

When it comes to trade compliance audits conducted by Customs and Border Protection (CBP), standard requests often include a variety of documents. CBP will usually make inquiries about a company’s internal policies involving its compliance framework, as well as the steps taken in regard to payment systems and processes used for the import or export of goods.

Conversations between the auditor and personnel involved with trade compliance may cover the specifics of product descriptions, inventory tracking methods, or even drawing attention to potential areas of risk that could require additional diligence when conducting business over international borders.

  • Are there any existing prior disclosures with Customs? If a company discovers an error in their import transactions, it’s advisable to inform CBP instead of waiting for them to discover it. By submitting a Prior Disclosure, which acknowledges the import law violation with no intention to harm, CBP is likely to impose less severe penalties compared to if the company attempts to conceal the mistake.
  • Are there documented policies and procedures? If yes, please provide a copy. It is essential to have documented policies and procedures for global trade to ensure compliance with laws and regulations. These policies and procedures should cover topics such as export controls, sanctions compliance, customs compliance, and anti-corruption measures. Having clear and comprehensive policies and procedures not only helps to avoid legal and financial risks but also contributes to building trust with customers and stakeholders. It is recommended that companies regularly review and update their global trade policies and procedures to stay current with changing laws and regulations.
  • Is there a post entry review process that is implemented? Post entry review processes are designed to ensure compliance with customs regulations and to identify any errors or discrepancies in trade documentation that may result in penalties or delays in shipments. Post entry reviews typically involve a thorough examination of trade data, including import and export declarations, invoices, and other supporting documents.

What does a compliant operation look like?

A compliant global trade operation is one that adheres to all applicable international trade regulations, laws, and policies while still efficiently and effectively conducting business across borders. Such an operation would have robust compliance programs that ensure all aspects of their global supply chain, from sourcing and procurement to shipping and delivery, are fully compliant with trade regulations. It would also maintain accurate and complete compliance documents of all transactions and communications and have a system in place to regularly review and update its compliance policies and procedures. In addition, a compliant global trade operation would have a culture of compliance and ethics that is ingrained at all levels of the organization and upheld by all employees and stakeholders. Ultimately, a compliant global trade operation is one that prioritizes legal and ethical trade practices, ensuring that it maintains a positive reputation and avoids legal and financial risks.

The Key Areas of Global Trade Risk Management

  • Risk – How do you classify? How do you ensure the correct value is declared to Customs? What process do you use to qualify for FTAs? What documentation do you use to qualify? Are you being proactive in this process?
    Let me know if you have any questions.
  • Savings – How are you utilizing the HTS and FTA tools? Strategies i.e. duty deferral.
  • Efficiencies – Do you utilize a centralized location for part information? Or are you using separate documentation to qualify? Are you opening yourself up to risk by using multiple companies/teams when one company/team could handle it all?

Steps for managing a CF28 – a formal request of information from CBP

If you’ve imported goods into the United States, there’s a possibility of receiving a Customs Form 28 (CF-28) related to your entry. When dealing with a CF-28 (Request for Information) from Customs, it is important to react fast and efficiently to avoid any potential delays or penalties. Here are some tactics that can help in dealing with a CF-28:

  • Have an action plan for receiving a CF-28: As a business, you should have an established action plan in place to deal with CF-28 requests from Customs. This includes identifying the person responsible for handling such requests, establishing a timeline for responding, and ensuring that all necessary documents and information are readily available.
  • Respond immediately: When you receive a CF-28 from Customs, it is important to respond immediately. The clock starts ticking as soon as you receive the request, and delaying your response can result in further inquiries, penalties, or even seizure of goods.
  • Call Customs about their inquiry: If you have any questions or concerns about the CF-28, it is important to contact Customs as soon as possible. This can help you clarify any doubts you may have and ensure that you are providing the correct information.
  • Talk with your Customs Broker, Trade Consultant or Legal Counsel: If you have a Customs Broker, Trade Consultant or Legal Counsel, it is important to involve them in the process. They can provide valuable insight and advice on how to handle the CF-28 and ensure that you are complying with all Customs regulations.
  • Fully answer all parts of the CF-28: It is important to fully answer all parts of the CF-28 and provide all requested information. Failing to do so can result in delays, penalties, or further inquiries from Customs. Ensure that all information provided is accurate and up-to-date, and that all necessary supporting documents are included.

How can an importer ensure they are managing a compliant operation?

Any importer can achieve compliance with the expertise of the professionals at Copper Hill Global Trade Compliance. The Copper Hill team can assess the importer’s current trade practices to identify areas where improvements can be made to ensure compliance with relevant regulations and laws. Based on this assessment, we create a customized compliance program that is tailored to the importer’s specific needs. This program includes a range of tools and resources to support the importer in managing and monitoring their trade activities, including training, software, and ongoing support. By working with Copper Hill, the importer can be confident that they are following best practices and meeting all regulatory requirements, reducing the risk of penalties or legal action.

Contact Copper Hill for all your customs risk management needs!