The common thread that runs through all of these elements is communication, and the most important issue that we need to communicate is compliance, especially in light of the consequences presented when Canada and US Customs detect non-compliance and enforce the full array of penalties and sanctions that are now at their disposal under federal legislation.
The following is a bird’s eye view of compliance from several perspectives, including:
- Why Compliance Matters
- How Canada and US Customs are watching your trade activity
- What to consider in developing a compliance assurance plan
- What to expect if you are selected for an audit
- Self-service compliance management tools
Do You Have a Compliance Assurance Strategy?
CBSA’s introduction of the Administrative Monetary Penalty System in 2002, the level of scrutiny and degree of detail required has been increased significantly, with the ultimate responsibility placed on the Importer of Record for the integrity of the data presented to CBSA for each transaction.
In 2007, the application of penalties for non-compliance has increased 10 fold. Minimum penalties are $100 per transaction with an initial audit maximum penalty of $25,000, second audit maximum of $200,000, and third audit maximum of $400,000.
As your broker, we release and account for your shipments based on the commercial information we are provided from you, your vendors, and your supply chain. Often this information is nebulous, inaccurate, or misleading, and does not hold up to the scrutiny and forensic level of detail that is applied during a CBSA audit.
Your risk of penalties under the fully enforced AMPS regime will depend on variables including your total annual value for duty; scope of your import database including number of vendors, number of products, industry type, status as a manufacturer, importer, or distributor; countries of origin of your imported products; completeness of vendor information and commercial invoice descriptions; the static or dynamic nature of your product database; number and complexity of new product SKUs added.
It is recommended that Importers take a proactive approach to managing risk by having all elements of your import profile “purified” for accuracy, especially in the areas of tariff classification, origin, and valuation, and once that is completed, implement an ongoing review to purify new vendors you deal with, or new products imported from existing vendors.
At minimum, it is recommended that you select the areas of greatest risk and have these reviewed regularly to show diligence and due care to CBSA that you are taking intentional action to be compliant. The same principles and recommendations outlined above apply to US importers, as the issues and areas of potential concern are parallel, while the specific fines and penalties vary depending on the nature and scale of the infraction.Should you act on our recommendation of taking either a comprehensive or selective approach to managing your compliance obligations, GHY can assist by working with you collaboratively to build and maintain a database that reflects the level of detail that will survive a forensic review by CBSA or US Customs in a transactional review or audit. Contact your Account Manager, Alan Dewar, Vice President Canadian Operations, or Vicki DeLuca, Vice President US Operations, for more information.