Date: Wed, 31 Dec 1997 20:55:00 GMT Server: WebSitePro/1.1g (S/N WPO-2024) Accept-ranges: bytes Content-type: text/html Last-modified: Mon, 13 Jan 1997 22:32:57 GMT Content-length: 5373 Press Release - December 30, 1996

CUSTOMS IS READY TO REAP THE HARVEST OF ITS INFORMED COMPLIANCE EFFORTS


By David Serko, Contributing Editor for WWS/World Wide Shipping
On May 20, 1996, Commissioner of Customs, George Weise, issued a memorandum to the trade community entitled Informed Compliance Strategy.

Essentially, this document is notice to the entire trade community, including importers, exporters, brokers, warehouse proprietor, etc., that Customs expects the "highest possible compliance level" from the community.

The notice emphasizes the great effort Customs has made since the passage of the NAFTA Implementation Act of 1993, specifically, the Customs Modernization Act ("Mod Act") provisions of the Act, to meet its new responsibilities for "clearly defining and communicating the responsibilities of the trade community." Clearly, Customs has taken the concept of Informed Compliance, the cornerstone principle of the Mod Act, very seriously. Customs defines the principle as "a shared responsibility wherein the Customs Service effectively communicates its requirements to the trade, and the people and businesses subject to those requirements conduct their regulated activities in conformance with U.S. laws and regulations." In order to live up to its responsibilities, Customs has taken great pains to reorganize in an effort to streamline the interaction between Headquarters and its field offices, to better implement and direct a national compliance policy. As these efforts have progressed, Customs has employed a variety of methods to keep the trade community informed about these reorganization efforts and, more importantly, about the changes in the law brought about by the Mod Act and what is expected of the trade for it to meet its reasonable care responsibilities.

With its redesigned internal structure and methods for disseminating information to the trade (e.g., Customs Electronic Bulletin Board, Rulings, Notices, Directives and Miscellaneous publications such as the subject memorandum) in place, Customs appears ready to test the effectiveness of its compliance efforts.

According to Commissioner Weise, Customs has developed two complementary means for ensuring that the trade complies with U.S. trade laws, which include, informed, voluntary compliance and enforced compliance.

Informed Voluntary Compliance requires the trade to obtain and apply to its transactions the information Customs makes available. In addition, the trade is expected to: establish internal controls; ensure that personnel involved in Customs activities are properly trained; work in partnership with Customs to develop informed compliance programs; and, seek clarification when Customs requirements are not understood.

In short, informed, voluntary compliance, presupposes that the trade community is exercising reasonable care with regard to its Customs business and, thus, full compliance is achieved voluntarily. Where reasonable care has not been exercised, Customs will proceed in an enforced compliance mode. That is, when voluntary compliance is not achieved, enforced compliance actions will be taken by Customs against those members of the trade who have not exercised reasonable care. Considering that the Mod Act provides Customs with considerable new penalty authority (e.g., intentional failure to supply required records can result in a $100,000.00 penalty per line release, false drawback claims can result in penalties of three times the actual or potential loss of revenue, etc.) in addition to its already considerable penalty, seizure and forfeiture authority, any suggestion that Customs will exercise its enforcement power is cause for legitimate concern. Therefore, it behooves the trade community to, first, work toward voluntary, full compliance by availing itself of all the information and direction Customs has offered. Second, the trade should correctly apply this information, to ensure it is acting in strict observance of the law.

Commissioner Weise's memorandum makes it clear that Customs has labored long and hard to plant the seed of informed compliance. The Service, now, appears ready to begin reaping the harvest of these efforts. Considering the great expenditures of time and manpower allocated to getting the word out to the trade community on what Customs expects the trade to do in order to meet its reasonable care requirement, Customs will have no reservation in separating the wheat from the chaff.

Members of the trade community who have taken their obligation to exercise reasonable care seriously will work in a climate conducive to growth and prosperity, while those who do not will find themselves dealing with the Customs Service in a more chilly environment.


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Serko & Simon
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