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The CBSA uses two post-release verification processes to manage trade compliance with the Tariff Classification, Valuation, and Origin programs; Random Verifications and Verification Priorities.
Random Verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including:
- Risk assessment;
- Revenue assessment; and
- Promoting voluntary compliance.
Verification Priorities are determined through a targeted risk-based, evergreen process, meaning that new targets are added throughout the year. The current verification priorities can be viewed here.
Get started on your compliance plan by appointing a Compliance Coordinator with the following responsibilities:
- Review your customs-related systems, procedures and mechanisms
- Assess your level of compliance
- Implement links between your purchasing, receiving and payables processes
- Develop, document and implement a Compliance Plan
- Report all discrepancies to your customs broker to avoid penalty
Your Compliance Coordinator should then review your internal customs systems and implement a voluntary compliance plan before the CBSA comes knocking at your door. Here’s how to tell whether you need a compliance plan:
- Can you prove that each import shipment entering your facility has been released by Customs?
- Do you review your customs declarations to make sure they match what you actually received and paid your vendor for?
- Do you report all discrepancies in the customs process to Customs?
If you decide to wait until Customs say they are going to perform a “verification review” (their lingo for audit), it is too late to correct past errors and you could be in a penalty position.
The CBSA have issued millions of dollars in penalties to the import/export community since the Administrative Monetary Penalty System (AMPS) was introduced in October 2002.
You should also know AMPS comes with a “Reason to Believe” clause pertaining to discrepancies in tariff, value and origin. This means if you have reason to believe an error has occurred, you must submit a voluntary adjustment (not subject to penalty) within 90 days.
AMPS monetary penalties will be issued against errors, including simple errors with no intent to defraud. This means that even the smallest of clerical errors may be subject to a penalty assessed on either a scale rate or a percentage of the shipment value, depending on the infraction involved.
The penalty list contains 181 items. Most are on a graduated scale, meaning they will escalate if the number of infractions increases. Infractions will remain on your customs profile for up to three years.
Universal Logistics can provide all the support you need – from a full-blown compliance review of your systems and processes, to the submission of voluntary adjustments on your behalf to the CBSA. Part of this support includes monthly customs declaration reports that make it simple and easy to identify and report errors. We do all the rest, including preparing and submitting the necessary voluntary adjustment to Customs.
Remember, the best way to reduce your risk of penalty is by investing in compliance rather than paying for non-compliance.
For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
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