Five Compliance Best Practices for … Customs Recordkeeping

As an accompaniment to our biweekly series on What Every Multinational Should Know About various international trade, enforcement, and compliance topics, below find an update to our “Five Compliance Best Practices” series, which provides quick-hit advice on how organizations (particularly multinational companies) can implement compliance best practices to enhance their compliance programs and internal controls.

Customs recordkeeping requirements are encoded in the Customs regulations and are mandatory for importers. To conduct a quick check on the adequacy of your Customs recordkeeping, consider conducting the following Five Things:

• Ensure You Have a Written Customs Recordkeeping Policy, Whether as Part of Your Customs Manual or Within the Destruction Schedule of Your Records Information Management Policy. Customs recordkeeping is not just a good idea; it is explicitly mandated by the Customs regulations. If you have not recently reviewed your recordkeeping policy, a quick review to ensure that you have one and that it is consistently followed is a good idea.
• Ensure Your Policy Covers All Required Customs Recordkeeping Requirements. Customs regulations that you maintain full information supporting the full payment of the tariff, the valuation of the goods, the country of origin, and duty/tax payments. Relevant documents include copies of such import/export documents as commercial invoices, packing lists, bills of lading, air waybills, and other data supporting the information declared on your Form 7501 Entry Summary. Among other requirements, these documents should accurately describe the goods being imported or exported, their value, quantity, origin, and other relevant details. Other documents relevant to the transaction can include records related to the transportation of goods, such as shipping contracts, freight invoices, transportation receipts, and delivery confirmations. Even emails that help set up the terms of sale may be relevant. Ensure all required elements are covered in your written recordkeeping requirements by comparing them to the Customs regulations and Customs guidance.
• Evaluate Whether You Are Maintaining Required Origination Information and Licenses/Permits. Many free trade agreements, including the U.S.-Mexico-Canada Agreement require that importers have certificates of origin on hand at the time of importation for goods benefiting from free trade preferences. You should have procedures in place to ensure that your company is maintaining copies of certificates of origin and other supporting documentation that verify the origin of imported goods. These documents may be required to qualify for preferential tariff treatment under free trade agreements or other trade programs or to respond to Customs inquiries about the same.
  
  You also should confirm that your company maintains all required importation licenses and permits. If your import patterns include goods where there are licensing or permitting requirements to allow for importation, or certificates required for the importation or exportation of specific goods, such as controlled substances, hazardous materials, or restricted items, then you should check that these documents are regularly archived and kept for the minimum required period.
• Check Whether Your Company Maintains All Required Financial Records. Customs regulations require that importers maintain certain financial transactions related to international trade, including invoices, receipts, payment records, and bank statements. These records should demonstrate the payment of duties, taxes, and other fees associated with customs clearance.
• Check that Your Company Maintains Correspondence and Communications with Customs and Other Third Parties. Your company should maintain records of all correspondence and communications with customs authorities, suppliers, freight forwarders, customs brokers, and other parties involved in international trade transactions. This includes emails, letters, faxes, and other forms of communication.

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