CBP importer crackdown puts thousands of cross-border freight shipments at risk 

The agency said it is comprehensively reviewing information submitted on Form 5106, which is used to establish or update an importer identity with CBP.

If CBP determines that an importer, or a customs broker acting on its behalf, failed to provide complete and accurate information, the agency can void the IOR number and pursue additional enforcement action.

The agency has not publicly disclosed how many importer numbers have been voided since the new enforcement took effect.

Those requirements could pose particular issues for some foreign companies importing goods into the United States.

Potentially exposed arrangements include nonresident importers that have listed a U.S. customs broker’s address because they lack U.S. premises, foreign sellers acting as importers of record in delivered-duty-paid transactions, e-commerce sellers using third-party fulfillment centers and smaller importers whose records were created years ago and have not been updated, according to an analysis by Diaz Trade Law.

The enforcement could have implications for cross-border freight moving from Mexico and Canada, where foreign companies may serve as nonresident importers of record for merchandise entering the U.S.

One of the biggest operational risks is that an importer may not discover that its number has been voided until a shipment is already moving through the supply chain.

CBP will send written notification of the voiding to the email address most recently submitted by the importer and, when applicable, copy the customs broker that most recently filed an entry on its behalf.

CBP’s notice does not describe a process in which importers receive a warning or period to correct the information before their numbers are voided. Instead, an importer can seek to have the number reestablished after CBP takes action.

Importers caught in that situation could face additional costs while freight waits for the issue to be resolved. Diaz Trade Law warned that affected cargo could accrue port-related costs while companies work with CBP to reestablish their numbers.

Importer enforcement grows on both sides of US-Mexico border

The CBP crackdown comes as authorities on both sides of the U.S.-Mexico border have increased scrutiny of companies participating in international trade, although the U.S. and Mexican enforcement initiatives are separate.

Mexican authorities earlier this year suspended import activities and began proceedings to cancel permits for 350 companies involved in steel imports after regulators alleged irregularities involving some importers.

The companies were among 750 firms flagged for review as part of a Mexican government crackdown on smuggling and alleged misuse of trade programs.

Some of the companies faced removal from Mexico’s Manufacturing, Maquiladora and Export Services Industry, or IMMEX, program, which allows export-oriented manufacturers to temporarily import raw materials and components without paying duties.

Another 400 companies remained under investigation and were required to provide additional documentation.

Customs brokers face greater scrutiny

CBP’s enforcement push also places customs brokers under increased scrutiny.

Brokers submitting importer information must conduct due diligence to ensure the information is accurate and cannot simply substitute their own contact information for that of their customers.

CBP regulations also require brokers to obtain a power of attorney directly from the importer rather than through a freight forwarder or other third party.

Inaccurate or misleading information could expose brokers to monetary penalties and other enforcement action.

“A brokerage that populated its own address, email, or phone across hundreds of client records has hundreds of potential defects,” Diaz Trade Law said.

Why it matters: The crackdown turns importer identity records into a potential cargo-clearance issue for shippers, customs brokers and cross-border freight operators moving goods into the U.S.