A recently-published resource guide underscores that the U.S. government has significantly elevated its posture on trade fraud enforcement and signals a more aggressive and coordinated approach that importers are already starting to see. The guide may also represent a benchmark that authorities will use in pursuing future enforcement actions.
For companies engaged in international trade, the message is clear: customs compliance is no longer viewed simply as an administrative function. It is now treated as a core corporate risk area with potentially significant civil, criminal, and reputational consequences. As such, importers should strongly consider shifting from a reactive to a proactive stance on trade compliance issues.
For more information on how this approach may affect your business, and how you can mitigate potential negative impacts, contact STR.
What’s New
Trade Fraud Framed as National Security Issue
Historically, customs enforcement focused primarily on revenue collection and administrative compliance. The new guide reframes trade fraud as a threat to economic security, domestic manufacturing competitiveness, public health and safety, supply chain integrity, human rights, and national security. It repeatedly emphasizes that false declarations, tariff evasion, forced labor imports, and misrepresented goods can fund adversarial interests, undermine domestic industries, and introduce dangerous products into U.S. commerce.
Federal Agency Collaboration
The guide articulates a more coordinated enforcement strategy in which U.S. Customs and Border Protection, Homeland Security Investigations, Department of Justice litigators, and other federal agencies intend to work together on trade fraud investigations and prosecutions. This reflects a shift toward a whole-of-government approach in which criminal prosecutions, False Claims Act cases, administrative penalties, forfeiture actions, forced labor sanctions, money laundering investigations, and even securities law remedies may be deployed in parallel or in combination against companies and individuals involved in trade fraud.
More Aggressive Action
Importers should expect more aggressive use of CBP’s statutory authorities allowing the agency to recover unpaid duties; impose substantial penalties for negligence, gross negligence, or fraud; and penalize parties that import or facilitate the importation of merchandise contrary to law. CBP is also increasing the use of bond claims, audits, restrictions on in-bond privileges, and maximum penalties for persistent compliance failures. Criminal prosecutions may be pursued in cases involving intentional misconduct, where penalties can range from fines and forfeiture of merchandise to lengthy prison sentences. FCA cases in particular can result in treble damages.
The guide makes clear that liability may not stop at the importer of record. Enforcement authorities intend to investigate and, where appropriate, pursue customs brokers, logistics providers, wholesalers, resellers, downstream distributors, and corporate executives. Companies can no longer assume that responsibility ends once goods clear customs.
Company Responsibilities
The guide emphasizes that “the era when a company can claim ignorance of its upstream partners’ activities is over.” While the longstanding responsibility of importers to exercise reasonable care is reinforced, the guide also makes clear that the government expects companies to audit supply chains, verify supplier representations, identify transshipment risks, investigate country-of-origin claims, monitor forced labor exposure, and maintain effective internal controls. Willful blindness, reckless disregard, and inadequate oversight may be treated as evidence supporting enforcement actions.
Key Shifts in Enforcement Emphasis
Although many of the enforcement authorities discussed in the guide already existed, the document represents a notable policy shift in several respects.
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Previous Approach
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New Approach
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Compliance viewed primarily as a customs issue
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Compliance framed as economic and national security issue
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Focus on importer of record
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Focus on entire supply chain
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Administrative penalties often emphasized
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Civil, criminal, and administrative remedies highlighted
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Forced labor enforcement important but specialized
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Forced labor integrated into broader trade enforcement strategy
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Customs and law enforcement often viewed separately
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Explicitly coordinated DOJ-DHS enforcement model
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Reactive compliance expectations
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Active due diligence and supply-chain oversight expected
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Enforcement Priorities
Trade Fraud Typologies
The guide identifies the following common types of trade fraud.
- false product and origin declarations
- transshipment schemes
- classification fraud
- undervaluation
- free trade agreement abuse
- evasion of antidumping and countervailing duties
- shell company structures
- drawback fraud
- forged product certifications
- port shopping after import refusals
- bypassing prior notice requirements for food imports
- illegal timber and wildlife laundering
- adulterated drugs and medical devices
Forced Labor
The guide makes clear that forced labor enforcement is not limited to shipment detentions and import bans; criminal liability may also apply to companies and individuals that knowingly benefit from forced labor or act in reckless disregard of such practices. Importers should therefore view forced labor compliance as both a customs issue and a potential criminal law risk.
Health and Safety Compliance
The government is equally focused on imports regulated by partner agencies such as the Food and Drug Administration, the Environmental Protection Agency, the Consumer Product Safety Commission, the Department of Agriculture, the Fish and Wildlife Service, and the National Highway Traffic Safety Administration. False certifications, failure to report product defects, and inaccurate declarations involving regulated products may trigger both customs and criminal enforcement.
What Importers Should Do Now
To prepare for the broader enforcement approach outlined in the guide, importers should strongly consider taking the following actions.
- use the guide as a benchmark for conducting compliance reviews regarding issues like country-of-origin determinations, classification, valuation, AD/CVD exposure, duty calculations, free trade agreement qualification procedures, and partner government agency requirements
- strengthen supply chain due diligence by mapping critical suppliers, verifying manufacturing locations, reviewing subcontractor networks, assessing transshipment risks, evaluating forced labor exposure, and documenting supplier verification procedures
- elevate trade compliance from an operational function to an enterprise risk-management issue with executive and board-level visibility
- ensure that customs brokers conduct appropriate due diligence, escalate discrepancies, maintain required records, and follow documented compliance procedures
- prepare for regulatory inquiries by ensuring that five-year record retention requirements are met, supply chain documentation is readily accessible, internal investigations procedures are in place, and compliance training is current and documented
- consult counsel regarding whether identified issues warrant voluntary disclosure, which could reduce liabilities and exposure
Bottom Line
While the guide does not create any new legal authorities, it should certainly be viewed as a statement of intent to prosecute trade misconduct with increased intensity and a roadmap for future enforcement actions. For importers, customs brokers, manufacturers, distributors, and logistics providers, robust trade compliance is no longer simply a regulatory requirement – it is now a strategic business imperative.
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