CBP Proposal to Require Personal Data from Importers

Dear Friends,

I am writing to make sure you saw a notice US Customs and Border Protection had published in the Federal Register earlier this month related to the Importer ID Input Record (CBP Form 5106).  This notice is significant because it is proposing to revise this form to require a great deal more data from importers/ultimate consignees, including personal data about corporate officers.  I expect that if this change goes through all importers (not just new importers) will be required to re-register with CBP using the new form.  A copy of the notice is available here.

As you know, the current version of the CBP Form 5106 (copy available here) is pretty bare-boned (i.e., it requires very little information from the importer).  CBP is seeking to change that, so it can better assess a company’s risk (a laudable goal).  Specifically, CBP states that the additional information it is seeking “will enhance CBP’s ability to make an informative assessment of risk prior to the initial importation, and will provide CBP with improved awareness regarding the company and its officers who have chosen to conduct business with CBP.”  CBP also states that it expects the officers whose information is submitted will “have importing and financial business knowledge of the company”.

The issue here is that CBP is treating the importing community as a monolithic entity and requiring the same information from everyone – thus, a private company that imports $15 million a year worth of wooden bedroom furniture from China (which is subject to antidumping duties) has to provide the same intrusive (and arguably not relevant) info as a public company that imports $1.5 billion a year of duty free merchandise.  Does CBP need the same data from each of these companies to assess risk?  For example, does it really need to know who the company’s primary banking institution is in both cases?  Does CBP really expect that the officers in the second example will have “importing knowledge” of the company? (how many trade compliance people want a CBP import specialist calling their CEO or CFO and asking?)  Does CBP really need the direct phone, email address, social security number and passport information for the officers of a large company?

While CBP may need more information about the importers it regulates, the current proposal does not seem fully baked (to me).  It is simply not clear how the information sought to be collected will actually help CBP achieve its goal in most cases.  It would be better if CBP adopted a “risk based approach” for this and focused tailoring the questions to the companies based on the risk they actually present.  For example, CBP’s form could ask for more, less or different info depending on whether a company is publicly traded in the US or private (which would give CBP an indication as to whether the importer is subject to Sarbanes Oxley requirements/controls); whether an importer is a “large importer” or a “small importer” (e.g., will you import more than $10 million a year worth of merchandise, $100 million, $1 billion?), etc.

A number of clients have raised concerns with this notice and we will be preparing comments for companies to submit by December 8, 2014.  The cost for participating in this effort will not be significant (i.e., the cost of preparing a brief letter divided by the number of clients who would like to submit comments).  If you would like to participate in this effort, please let me know.

Best regards,

Ted

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