U.S. Customs & Border Protection (“CBP”) has issued a Notice of Proposed Rulemaking which would amend the Customs Regulations to require customs brokers to collect and retain certain information from importers, in order to verify importers’ identities. See 84 Fed. Reg. 40302 (Aug. 14, 2019). The proposed rule applies to domestic and nonresident importers.
Currently no such regulation exists. The proposed rule would add a new section to the Customs Regulations, 111.43, entitled “Importer Identity Verification”. The proposed regulation would establish identity collection criteria and create a required verification process for customs brokers to implement with respect to their importer clients. Brokers would be required to collect and verify the following information concerning each importer:
- the client’s name;
- for a client who is an individual, his/her date of birth;
- for a client that is a partnership, corporation or association, the grantor’s date of birth;
- for a client that is a partnership, corporation or association, the client’s trade or fictitious names;
- the physical address and phone number (for a client that is a partnership, corporation or association, the physical location is the client’s headquarters);
- the client’s e-mail address and business website;
- a copy of the grantor’s unexpired government-issued photo identification;
- the client’s Internal Revenue Service, employer identification or importer of record number;
- the client’s publicly-available business identification number;
- a recent credit report;
- a copy of the client’s business registration and license with the state; and
- the grantor’s authorization to execute a power of attorney on behalf of the importer.
Prior to transacting customs business on behalf of a client, the customs broker would be required to verify the foregoing information and determine whether the client is a sanctioned or restricted person or entity, or if the client is suspended or disbarred from doing business with the U.S. Government. The proposed rule suggests several means of verifying this information, such as internet research, reviewing the client’s articles of incorporation, an in-person meeting with the client, etc. Customs brokers would be required to maintain records of the verification exercise and revalidate the importer’s identity annually.
The new rule would extend the verification requirement to existing clients. For existing clients with a Power of Attorney issued by a partnership, brokers would have two years from the effective date of the final rule to verify the client’s identity. For all other existing clients, the broker would have three years from the effective date of the rule to verify the client’s identity.
The rule would also impose penalties on customs brokers for noncompliance. The proposed penalty consists of a monetary penalty not to exceed $10,000 per client, or revocation or suspension of the customs broker’s license or permit.
Comments to the proposed rule must be received by CBP on or before October 15, 2019. Please feel free to contact our office if you are interested in contributing to the comment process, or wish to discuss the proposed rule with one of our attorneys.