U.S. importers are subjected to “Focused Assessments” by Customs and Border Protection (“CBP”), which can be long and costly audits during which CBP assesses importers’ compliance programs and documentation. Importers can receive a notice that it is subject to audit at any time. CBP does not just look for intentional violations of law; it looks for violations of the standard of reasonable care in adhering to its interpretations of laws and regulations. If an importer has inadvertently failed to exercise what CBP thinks is reasonable care, the importer can be subjected to enforcement action with fines and penalties.
There is a way, however, not to be one of those importers that are subject to focused assessments at any time. CBP offers an Importer Self-Assessment (“ISA”) Program that allows importers located in the U.S. that have been importing for two years to take responsibility for ensuring and monitoring their own compliance, in exchange for establishing, demonstrating, and testing robust compliance procedures.
In order to benefit from the ISA Program an importer must either:
- Be a member of the Customs-Trade Partnership Against Terrorism (“C-TPAT”), a process by which importers complete a questionnaire, maintain an internal control system, conduct annual risk assessments and compliance system tests, comply with various recordkeeping and disclosure requirements; or
- has completed a focused assessment by CBP and can use the results of and the system resulting from the audit to join the ISA Program by an abbreviated process—by submitting a memorandum of understanding, agreeing to comply with CBP regulations and submitting an internal controls testing plan for approval. (This alternative was just approved this month).
Once a member of the ISA program, the importer is exempt from focused assessments, receives special access to CBP personnel who can provide assistance, access to its own trade statistics, and, most important, advantages in the event that it makes a mistake. By adhering to the ISA standards, the importer entitles itself to mitigation of penalties and damages for an import violation that it did not manage to avoid and an opportunity make a voluntary disclosure (which itself supports mitigating penalties) even of a violation that is discovered by CBP.
The ISA Program may seem like a lot of work, but it is intended to provide some compliance peace of mind. We advise importers and exporters to conduct their own compliance audits periodically, and the ISA Program is a way of conducting the compliance audits that should be done anyway with some added benefits.