CBP Imposes Heightened Requirements for IORs and Customs Brokers

U.S. Customs and Border Protection has issued an interim final rule that will establish new requirements for foreign importers of record when making entry, corresponding responsibilities for licensed customs brokers with regard to their clients, and consequences for foreign IORs and brokers that fail to comply with the new requirements.

This rule implements only some of the requirements and restrictions for IORs laid out in a June 3 executive order directing a broad tightening of customs enforcement efforts.

The rule will be effective as of Jan. 5, 2027, and comments on it are due by that date. Brokers may submit by Jan. 5 requests for delayed compliance with the new verification requirement (see below), but all brokers are expected to be in full compliance with the rule by May 6, 2027.

U.S. IORs

Under this rule a U.S. IOR is an individual who is (1) a U.S. citizen or lawful permanent resident or (2) an entity that is organized under the laws of the U.S., is located in the U.S., and maintains at all times (a) at least 51 percent of beneficial owner(s) who are U.S. citizens or lawful permanent residents and have control of the entity, or (b) direct ownership of a significant amount of unencumbered real property in the U.S. Whether an individual or entity qualifies as a U.S. IOR is subject to verification by the appropriate Center of Excellence and Expertise director using criteria set forth in the rule.

The rule provides that qualification as a U.S. IOR must be declared at the time of filing an entry and entry summary. If an entity inaccurately declares that it qualifies as a U.S. IOR, CBP will have the ability to require live entry and discontinue immediate delivery privileges.

Foreign IORs

The new rule prohibits foreign IORs (i.e., IORs that do not meet the criteria of a U.S. IOR) from making informal or formal entry of merchandise for consumption unless (1) they themselves are validated under the Customs Trade Partnership Against Terrorism or (2) they use a CTPAT-validated and licensed customs broker.

However, CBP states that it will be monitoring informal entries filed by foreign IORs and their brokers and that if it determines that such entries present risks to the revenue, national security, or public health and safety it will take action to fully prohibit foreign IORs from using informal entry.

U.S. IORs may continue to enter goods without the need for CTPAT validation, subject to existing requirements and applicable procedures for formal entry and informal entry, and may also elect to designate a customs broker that is not CTPAT-validated.

Customs Brokers

This rule requires customs brokers to verify that a client meets the above qualifications to be considered a U.S. IOR by requesting and reviewing client records. If a broker determines during such review that the client is not a U.S. IOR it must cease filing entries on behalf of that client if the broker is not CTPAT-validated.

The rule also clarifies that a power of attorney must be executed whenever a customs broker is transacting customs business on behalf of a client, even when the broker is acting as the IOR for an entry.

CBP emphasizes that, as of Jan. 5, 2027, being a licensed customs broker alone will not be sufficient to file entry on behalf of a foreign IOR or a foreign principal on a broker’s power of attorney unless that foreign IOR is itself a CTPAT-validated IOR. Instead, customs brokers acting on behalf of a non-CTPAT-validated foreign IOR must themselves be CTPAT-validated.

The rule also enhances CBP’s enforcement options against brokers to include broader applicability of penalties under 19 USC 1592, for which a maximum penalty may be assessed at the domestic value of the merchandise, rather than just under 19 USC 1641, which sets a maximum monetary penalty of $30,000.