December 31, 2009 // Straight talk on ISF enforcement

By Robert Stein, Director of Customs & Trade Compliance for Mohawk Global Logistics. Stein is a licensed U.S. Customs Broker and Certified Customs Specialist.

With the January 26th Importer Security Filing (ISF) enforcement deadline fast approaching, there has been a firestorm of rumor and opinion on what Customs will do on that fateful date.

With penalties of $5,000 per violation and up to $10,000 per shipment, importers want to know what to expect if things go dreadfully wrong.

In December, the trade had a rare opportunity to hear high level Customs officials, such as Commissioner Jayson Ahern, address our concerns publicly at the tenth annual Customs Trade Symposium in Washington D.C.

By now you have read numerous articles filled with long explanations about ISF and what will happen once full enforcement kicks in. But what does it all mean?

What Customs really wants is your data—not your money, says Rich DiNucci, CBP Director of the Secure Freight Initiative.

Well...maybe they still want your money. During his speech at the Symposium, DiNucci repeatedly said that Customs would work with filers and importers to get the data, emphasizing that, “we NEED the data.” DiNucci also explained that if a penalty was called for, “we [Customs] will not go draconian on liquidated damages.”

Most importantly, the message repeated over and over was that Customs will be rolling out enforcement for ISF the same way they rolled out enforcement for the 24 hour rule. This means that Customs will be focused on informed, rather than enforced, compliance. Customs has promised to work with importers and filers that are struggling with timely and/or accurate filing. Penalties will only be issued if importers or filers show no improvement and a lack of concern for compliance.

An unnamed source within Customs confided that the whole intent of enforcement starting on 1/26 is NOT to issue penalties but to work with filers and importers on operating in an informed compliance mode. The source felt that the concern within the trade about “unfair” penalties was unfounded and that the trade should “cut Customs some slack”.

One of the tools that Customs will use to help collect the ISF data is the use of “customs holds.” All ocean cargo arriving without an ISF will be placed on hold and will not be released to the importer, even if the customs broker has filed an entry and obtained a customs release. Customs expressed the hope that freight holds, and the associated demurrage charges, would be a sufficient incentive to push importers to make sure the ISF is filed without resorting to penalties.

What is clear is that the structured review of ISF by Customs is not complete. Customs will be working hard to make sure importers and filers are fully on board with ISF. Here are eight things that you should be doing.

8 do's for ISF compliance

1. Get your ISF Progress Report from your filer.
2. Review your Progress Report to understand where you stand.
3. Work with your filer to understand why errors are occurring or filings are not timely.
4. Communicate with your overseas sellers and let them know that they need to provide ISF worksheets and other documentation at least two days prior to vessel departure.
5. Educate your staff, especially buyers, on the importance of the ISF filing.
6. Include penalty clauses in sales contracts and PO’s that stipulate that the seller must provide ISF information at least 48 hours prior to vessel departure or be liable for monetary penalties.
7. Update your import compliance manual to include all ISF procedures.
8. Ask a compliance expert, such as Mohawk Global Logistics, to review your ISF process and provide recommendations to bolster compliance.

Customs is taking ISF very seriously and the deadline for enforcement is no laughing matter. However, with your continuing effort to comply, Customs will work with everyone to make sure the goal of 100 percent on-time filing is met as soon as possible while issuing the fewest possible penalties.

For further information or to set up an ISF consultation, contact Robert Stein at Mohawk Global Logistics.

Robert Stein
Director of Customs & Trade Compliance
Licensed Customs Broker & Certified Customs Specialist
Mohawk Global Logistics
rstein@mohawkglobal.com
Tel: (315) 552-5409

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