Five Compliance Best Practices for … Being an Importer of Record

As an accompaniment to our biweekly series on “What Every Multinational Company Should Know About” various international trade, enforcement, and compliance topics, below find an update to our series on compliance checks that every multinational company should consider. Give us two minutes, and we will give you five suggested compliance best practices that will benefit your international regulatory compliance program.

The importer of record holds significant responsibilities in the importation process, including compliance with customs regulations and ensuring the accurate entry of goods into the destination country. Here are some key responsibilities of the importer of record:

The importer of record plays a crucial role in ensuring compliance with customs regulations. Failure to fulfill these responsibilities can result in delays, penalties, or other consequences for the importer and their business.

Five compliance checks that every importer should consider include:

1. Recognize that Your Customs Broker is an Asset but Not the Responsible Party for Clearing Entries and Paying Tariffs. Many importers believe they can delegate all responsibility for import-related matters to their Customs brokers. But customs law firmly places all responsibility for accuracy in import clearance on the importer of record, not the Customs broker or freight forwarder. You should ensure that all personnel connected to import matters understand that the ultimate responsibility for import matters lies with the importer.
2. Set Your Company Up to Exercise Reasonable Care in Its Import Operations. Customs expects that all importers will exercise “reasonable care” in their clearance of imports. At a minimum, this includes responsibility for compliance with all relevant customs regulations and laws, including proper classification of imported goods, the declaration of the country of origin, valuation, the provision of full supporting information, and the correct and full payment of duties and taxes. Customs’ expectations are that every significant importer will have a tailored Customs manual for laying out overall responsibilities and the proper execution of import-related functions, an accurate and up-to-date Classification Index to ensure the consistent and correct classification of goods, protocols for dealing with Customs brokers, and a Customs Transfer Pricing Study if your company imports from related parties. You should review your Customs compliance procedures and infrastructure to ensure your organization is meeting these minimum requirements.
3. Set Up a Customs Coordinator. Customs is a specialized area of law, with its own sets of rules and requirements. Any significant importer should have someone within the company who is knowledgeable about Customs requirements and who can provide guidance regarding classification, valuation, and other Customs requirements for the proper calculation of the tariff due and other import requirements.
4. Set Up Systems for Active Customs Broker and Freight Forwarder Oversight and Management. Too many companies leave their Customs compliance to their Customs brokers or freight forwarders. Although these entities provide valuable services for importing goods, each importer of record is ultimately responsible for the accuracy of all submitted import information and the correct payment of all tariffs due. To exercise the reasonable care required by Customs of all importers of record, any significant importer should assign a person who is knowledgeable about Customs requirements to oversee all Customs brokers and freight forwarders, who can also take steps to ensure compliance with all Customs responsibilities, such as by conducting post-entry reviews.
5. Check the Integrity of Your Recordkeeping. Recordkeeping is the responsibility of the importer of record, not the Customs broker. Further, many Customs brokers only maintain records in an easily accessible format for one year, not the full five years required by Customs recordkeeping requirements. Significant importers should be maintaining separate records consistent with recordkeeping requirements called for under the Customs regulations.

If you have questions or concerns concerning this article, please feel free to reach out to any of the authors or your Foley & Lardner attorney. Would you like more practical compliance tips like these? Click Here to Register for our email list to receive future biweekly emails and practical international regulatory compliance tips.