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CBSA Cracking Down on Unreported Exports to Mexico

Posted December 01, 2015

The Canada Border Services Agency (CBSA) recently issued a Customs Notice advising the trade community that it will soon be stepping up compliance verification and enforcement actions against companies, many of which are believed to be in the automotive sector, that have not been declaring the export of goods transiting through the U.S. to Mexico and elsewhere, as required by the Customs Act and regulations.

The notice states that it has come to the CBSA’s attention that a “large number of businesses” have been neglecting to file the proper export paperwork, that is required when goods valued at CAN$2,000 or more are ultimately destined for a country other than the United States. Additionally, goods that are controlled, other than by a General Export Permit, also require that an appropriate permit or license be presented to the CBSA before the exportation, regardless of the value of the goods.

To remedy this situation, the CBSA will be offering a six-month “grace period” allowing companies to voluntarily disclose unreported exported shipments which transited through the U.S. prior to November 16, 2015. The CBSA advises that companies filing such voluntary disclosures during the “grace period” from December 1, 2015 to June 1, 2016 will not be penalized.

Afterwards, compliance audits will be conducted by the CBSA and penalties may be issued for failure to report exported goods. In this regard, exporters may be subject to Administrative Monetary Penalties, detention and seizure of export merchandise, or ascertained forfeiture. CBSA may also pursue criminal prosecution when it is of the view that an additional deterrent is warranted due to the seriousness of the offence.

Exporters are expected to use the Voluntary Disclosure process described in Memorandum D11-6-4, “Relief of Interest and/or Penalties Including Voluntary Disclosure.” Among other requirements, such disclosures must be voluntary and complete. In the case of a disclosure for exported goods, it is considered to be complete if it includes “all incidences of non-compliance up to six years prior to the disclosure in addition to the current year.”

It should be noted that the “grace period” does not exempt companies from their obligation to report and that any unreported goods exported after November 16, 2015 are not covered and may therefore be subject to penalties.