With a recent increase in enforcement of U.S. Customs and Border Protection’s importer security filing rule, it’s a good time for importers to review the basic requirements of this rule and examine their compliance.
Under the ISF rule, importers must transmit an ISF to CBP no later than 24 hours before the cargo is laden aboard a vessel destined to the U.S. (or any time prior to lading for foreign cargo remaining on board). The ISF consists of either ten data elements for shipments of goods intended to be entered into the U.S. or delivered to a foreign-trade zone (ISF-10) or five data elements for shipments entirely of FROB cargo or goods intended to be transported as immediate exportation or transportation and exportation in-bond shipments (ISF-5). CBP uses this information to assess the risk of arriving cargo shipments.
ISF importers are legally responsible for the accuracy and timeliness of their ISF filings, regardless of whether a customs broker or other intermediary does the actual filing. Typically, the ISF importer is the goods’ owner, purchaser, consignee, or agent, such as a broker.
However, in April 2018 CBP amended its regulations to expand the definition of ISF importer and place responsibility for filing the ISF-5 with the party causing the goods to enter the limits of a port in the U.S. and most likely to have access to the required ISF information. Specifically, for FROB shipments the ISF importer could be a non-vessel-operating common carrier as well as a VOCC, and for IE and T&E in-bond shipments and goods to be delivered to an FTZ the ISF importer could be the goods’ owner, purchaser, consignee, or agent (e.g., a licensed customs broker, carrier, or NVOCC).
As of March 15 CBP began issuing liquidated damages claims for violations of this rule, which only applies to ISF-5 shipments. CBP officials recently said ISF-5 compliance overall is currently about 88 percent. Enforcement for ISF-10 shipments has been in place for nearly a decade and compliance is now greater than 95 percent.
CBP has said that while the ISF-5 rule shifted the legal responsibility for such filings it would not change who actually submits the data in the “vast majority of cases.” For example, an NVOCC could use a customs broker or other third-party service provider to submit an ISF filing but, because it bears legal responsibility, would have to provide its own bond to secure the transaction. Since CBP enforcement focuses on liquidated damages rather than penalties, it is thus important for companies to ensure they understand their responsibilities and exposure when putting up their bond to secure ISF transactions.
For more information on the ISF rule and how to ensure your company is in compliance, please contact Lenny Feldman at (305) 894-1011.