International Alert CBP Identifies Most Common Reasons for Outbound Detentions and Seizures 08.10.10 On June 10, 2010, U.S. Customs and Border Protection ("CBP") held a webinar focusing on CBP's frontline enforcement of U.S. export controls rules and regulations. A copy of the PowerPoint presentation can be found here. Although much of the webinar covered basic information familiar to the seasoned exporter, even the most sophisticated exporters may be interested in the common reasons identified in the presentation for outbound detention and seizures (as quoted directly from the presentation): The absence or late filing of the Electronic Export Information in the Automated Export System (AES). Late filing of AES commodity data subjects the shipment to seizure. CBP has found that many times the USPPI has submitted the information to a third party for completion of the AES transmission. The third party, in turn, "batches" the transactions and they are filed on a daily basis. This process causes the AES filing to be either not in the system or late. If the commodity has been declared as under $2500 and invoicing or other documents show that it clearly is over $2500, the cargo is subject to seizure. Exporters who fraudulently declare cargo as under $2500 in order to avoid completing AES filing will be referred to fraud investigators for criminal prosecution. Claiming an ITAR exemption rather than getting a Department of State License. Failure to file AES on USML goods. Failing to obtain DSP-61 licenses for USML in-transit movements through the U.S. Paperwork for a licensed commodity is not transmitted within the correct time frame and the commodity is at the dock. Failure to claim a license or license exemption. Parties to the movement of the cargo not listed on the license. Indicating a license on the EEI that has nothing to do with the shipment. For licensable cargo, using a forwarder that is not an approved freight forwarder. Exporters using the ITAR exemptions in situations where they do not apply. Using the AES Canadian exemption on CCL/USML exports. Miller & Chevalier Chartered 655 Fifteenth Street, N.W., Suite 900 Washington, D.C. 20005-5701 202-626-5800 202-626-5801 FAX millerchevalier.com
Failing the submit AES filing on DSP 61/ 73 exports. Failing to submit ECCN # on AES submissions. Submitting the wrong mode of transportation. To be sure, many of these reasons are not new. But it is certainly worth reminding ourselves of several overarching themes. First, defense articles controlled under the ITAR continue to be a focus of CBP, for obvious reasons. Five of the 16 reasons above relate solely to ITAR-related issues. Thus, as for all controlled exports, exporters should continue to be mindful of the requirements for exporting defense articles. Second, errors committed by or related to freight forwarders continue to be a reason for outbound detention and seizures, thereby reinforcing the need to select and monitor your forwarders carefully. Finally, license exemptions also continue to be a focus of CBP, with four out of the 16 reasons identifying exemptions as a basis for detention and seizure. Although a few of the reasons suggest that mere use of an exemption may lead to detention and seizure, detention or seizure most likely requires at least an indication that an exemption is being used improperly. In any event, exporters should ensure that an exemption truly applies before citing it as a basis for a controlled export. With all of this in mind, exporters should tailor their business processes, compliance programs, and export transactions to avoid the common reasons outlined above. Consider using the reasons as a checklist or as a supplement to your existing list. Although no single compliance measure will eliminate the risk of detention or seizure, an eye towards the above reasons is likely to reduce that risk. For more information, please contact: David Hardin, dhardin@milchev.com, 202-626-1485 Daniel Wendt, dwendt@milchev.com, 202-626-5898 The information contained in this newsletter is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information about these issues, please contact the author(s) of this newsletter or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing. This newsletter is protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this newsletter without prior written consent of the copyright holder. Miller & Chevalier Chartered 655 Fifteenth Street, N.W., Suite 900 Washington, D.C. 20005-5701 202-626-5800 202-626-5801 FAX millerchevalier.com
Department of Homeland Security U.S. Customs and Border Protection (CBP) Outbound Issues Webinar Office of Trade Relations Point of Contact: Steven Graham, International Trade Liaison Office of Field Operations Points of Contact: Steven Stavinoha, Director, Outbound Programs, Cargo & Conveyance Security Robert Rawls, Outbound Program Manager Carla D Onofrio, Outbound Program Manager Office of International Trade Point of Contact: Susan Terranova, Esq., Attorney/Advisor, Regulations & Ruling
Other US Government Agency Roles Directorate of Defense Trade Controls (DDTC), State Department - U.S. Munitions List (USML). Bureau of Industry and Security (BIS), Commerce Department - dual-use and high-tech commodities (the Commerce Control List, or CCL)
Other US Government Agency Roles (cont d.) Bureau of Census, U.S. Department of Commerce reports export statistics. Other Involved Agencies: Office of Foreign Assets Control (OFAC), Treasury Department - sanctions and trade embargoes.
Other US Government Agency Roles (cont d.) Drug Enforcement Administration (DEA) - precursor and essential chemicals. Immigration and Customs Enforcement (ICE) - investigations for export enforcement.
What is the Role of CBP for Exports? To enforce other U.S. Government agency laws and regulations. Inspect and examine cargo, passengers and export documentation. Interdict unreported currency, stolen vehicles, and other illegal exports.
What is the role of CBP with export enforcement? Border search authority. Physical location at the borders. Authority to inspect, search, detain and seize goods being exported without the proper authorizations.
What is the Role of CBP for Exports? Preventing terrorist groups, rogue nations and other criminal organizations from obtaining U.S. Munitions List (USML), Commerce Control List (CCL) commodities. Enforce sanctions and trade embargoes. Increase export compliance
Revisions to Title 15 CFR Part 30 Mandatory filing of export information through the Automated Export System (AES) or through AESDirect. Effective date was July 2, 2008; Enforcement date is September 30, 2008. Increased penalty maximum/higher mitigation. CBP has been delegated the authority to issue penalties for violations of the FTR. CBP may issue a penalty to any party that caused the violation.
Revisions to Title 15 CFR Part 30 (cont d.) Penalties will be issued at $10,000 for the failure to file EEI (if required) in AES or the filing of incorrect or incomplete EEI. For late filing of EEI, or late filing of the complete manifest by carriers who file incomplete, a penalty in the amount of $1,100 per day late, up to a maximum of $10,000, will be issued to these parties. The penalties issued will be mitigated in accord with the mitigation schemes set forth in CBP Decision 08-50, which was published in the Customs Bulletin on January 2, 2009 (Customs Bulletin and Decisions, Vol.43, No. 2)
Revisions to Title 15 CFR Part 30 (cont d.) The timelines provided for in the Trade Act of 2002 will apply to the advance filing of export information filed in the AES or AESDirect. Depending on the mode of transportation, data will need to be provided in advance to the carrier within specific timeframes.
Filing of the Electronic Export Information (EEI)-19 CFR 192.14 Shipper Requirements File via the Automated Export System (AES). Receive AES Acceptance in the form of the Internal Transaction Number (ITN). Provide the ITN, AES post-departure filing statement or AES exemption statement to the carrier when the cargo is delivered to the carrier. Carrier Requirements Do not load any cargo without the ITN, the AES post-departure statement or the AES exemption statement. Place the ITN on the Cargo Manifest.
EEI Timeframes The time frame varies according to method of transportation for predeparture filing. For non-usml shipments, file the Electronic Export Information (EEI) as follows: Vessel cargo - 24 hours prior to loading cargo on the vessel at the U.S. port where the cargo is laden. Air cargo - 2 hours prior to the scheduled departure time of the aircraft. Truck cargo, - 1 hour prior to the arrival of the truck at the United States border to go foreign. Rail cargo - 2 hours prior to the time the train arrives at the U.S. border to go foreign. Mail - 2 hours prior departure of exporting carrier. Pipeline - within 4 calendar days following the end of the month.
EEI Filing Timeframes (cont d.) For USML shipments, file the Electronic Export Information (EEI) as follows: Vessel cargo- 24 hours prior to loading cargo on the vessel at the U.S. port where the cargo is laden. Rail cargo - 24 hours prior to the time the train arrives at the U.S. border to go foreign. Truck cargo - 8 hours prior to the arrival of the truck at the United States border to go foreign. Air cargo - 8 hours prior to the scheduled departure time of the aircraft.
CBP s Approach to Export Enforcement Risk Management based targeting Specially trained personnel Advanced automated information
CBP s Approach to Export Enforcement (cont d). Document Review: Invoice, packing list, manifest, master and house bills of lading/airway bills, license & license exemptions, other shipping documents. Automated Systems to screen for high risk shipments.
Top Errors on EEI 15 CFR 30.6 Electronic Export Information (EEI) data elements. 15 CFR 30.4 EEI filing procedures, deadlines and certification statements. 15 CFR 30.47(b) Clearance or departure of carriers under bond on incomplete manifest. (All required filing citations, exclusion and/or exemption legends are not filed by the carrier within the period provide by the bond). 15 CFR 30.2 General requirements for filing the EEI. SPECIFIC ERRORS NOTED: Wrong port of export; incorrect date of departure; incorrect consignee; incorrect values on export merchandise; no or incorrect carrier identification; incorrect Schedule B Number; failure to amend the AES record when changes become known to the filer.
Detentions/Seizures: A 5 Step Process 1. Port Inspection & Detentions examine export documents. 2. Referral to the appropriate Regulatory Agency CBP officer forwards the relevant shipment information to the appropriate regulatory office for review and a licensing determination.
Detentions/Seizures: A 5 Step Process 3. Licensing Determination Made The regulatory agency makes a determination on the detained merchandise and provides CBP with the information. 4. The port is notified with the necessary information concerning the licensing determination. 5. Release or Seize The CBP Officer then notifies the exporter of the determination and either releases or seizes the merchandise.
Common Reasons for Detention/Seizure The absence or late filing of the Electronic Export Information in the Automated Export System (AES). Late filing of AES commodity data subjects the shipment to seizure. CBP has found that many times the USPPI has submitted the information to a third party for completion of the AES transmission. The third party, in turn, batches the transactions and they are filed on a daily basis. This process causes the AES filing to be either not in the system or late. If the commodity has been declared as under $2500 and invoicing or other documents show that it clearly is over $2500, the cargo is subject to seizure. Exporters who fraudulently declare cargo as under $2500 in order to avoid completing AES filing will be referred to fraud investigators for criminal prosecution.
Common Reasons for Detention/Seizure Claiming an ITAR exemption rather than getting a Department of State License. Failure to file AES on USML goods. Failing to obtain DSP-61 licenses for USML intransit movements through the U.S. Paperwork for a licensed commodity is not transmitted within the correct time frame and the commodity is at the dock. Failure to claim a license or license exemption. Parties to the movement of the cargo not listed on the license.
Common Reasons for Detention/Seizure Indicating a license on the EEI that has nothing to do with the shipment. For licensable cargo, using a forwarder that is not an approved freight forwarder. Exporters using the ITAR exemptions in situations where they do not apply. Using the AES Canadian exemption on CCL/USML exports. Failing the submit AES filing on DSP 61/ 73 exports. Failing to submit ECCN # on AES submissions. Submitting the wrong mode of transportation.
Best Practices AES Transmission and export documentation should match the AES transmission, commodity description(s), invoice(s) and packing slip(s). Respond quickly to FP&F notices of seizure; delayed responses can be costly. Correct problems as quickly as possible. Use the Correct Port Code - If the commodity reaches the dock and the AES transmission cannot be located for that port the shipment can be seized.
Best Practices Voluntary Disclosure of items to be exported that were not properly imported CBP Form 7523 and Disclosure Statement from the State Department Census Regulations violations sometimes are technical issues; exporters or their agents should ensure that documentation and AES filings are completed correctly.
Department of Homeland Security QUESTIONS?
Department of Homeland Security U.S. Customs and Border Protection Office of Field Operations Points of Contact: Robert Rawls 202-344-2847 Carla D Onofrio 202-344-1196 Cynthia Oliver 202-344-3277 Office of Regulations & Rulings Office of International Trade Points of Contact: Susan Terranova 202-325-0009 Christopher Pappas 202-325-0109