Important CBP Updates: Increased Enforcement and New Compliance Requirements for Importers

As summer transitions into fall and colder weather approaches, importers should prepare for additional changes and increased enforcement measures from U.S. Customs and Border Protection (CBP). Under Executive Order 14411, Strengthening Customs Enforcement, several proposed initiatives have already begun to take effect, with additional requirements and enforcement measures expected in the near future.

Importer of Record (IOR) Number Deactivation

CBP has begun deactivating Importer of Record (IOR) numbers that have not been used to import merchandise within the past 12 months. Companies that have not imported recently should verify their status with their customs broker before arranging their next shipment. An inactive or deactivated IOR number may prevent a shipment from being cleared until the number is reactivated. This process can take up to two weeks, potentially resulting in shipment delays and additional costs.

Importer Data Validation – CBP Form 5106

CBP has also mandated the validation of importer information maintained in its systems to ensure accuracy and compliance. This initiative involves CBP Form 5106, which is used to establish or update an importer’s identity and business information within CBP’s records.

When a company or individual is established as an IOR, the importer or its customs broker submits identifying information to CBP. This information may include the business address, contact information, Employer Identification Number (EIN), corporate officer details, and other relevant business information.

CBP is now placing greater emphasis on validating this information through multiple sources. Discrepancies or inaccurate information may result in additional scrutiny, requests for supporting documentation, and potential enforcement action. Importers should proactively review their records to ensure that all information on file with CBP is current, complete, and accurate.

Additional Programs and Regulatory Changes on the Horizon

Several additional initiatives are expected to introduce more stringent requirements for both foreign and domestic importers of record, including:

• Foreign Importers of Record: Potentially more stringent qualification requirements, including increased bond requirements, CTPAT certification, verification of U.S.-based assets, ownership structure disclosures, and additional financial and operational information.
• Domestic Importers of Record: Expanded reporting requirements that may include anticipated import volumes, ownership and beneficial ownership information, business affiliations, supply chain details, domestic asset information, and other company-specific data.
• Polysilicon Imports: Effective December 4, a Minimum Import Price Floor and a 15% Section 232 tariff are expected to take effect. CBP has also established stockpiling limitations in advance of the December 4 implementation date.

Importers should closely monitor these developments and evaluate how the proposed and implemented changes may affect their business operations, supply chains, and overall compliance obligations.

Transshipment and Country-of-Origin Fraud: A Significant Compliance Risk

At a conference where I recently participated as a panelist, one of the questions raised concerned the mistakes importers may be making as they navigate the rapidly changing tariff environment.

One particularly concerning practice is transshipment intended to circumvent tariffs or other trade restrictions. This occurs when a company purchases goods manufactured in one country and routes them through another country, where the goods may be repackaged, relabeled, or otherwise misrepresented as originating from the second country.

To be clear, simply routing goods through another country does not change their country of origin. Misrepresenting the country of origin to avoid applicable duties or trade restrictions is a serious violation of U.S. trade laws. The consequences can be substantial, including significant financial penalties, seizure of merchandise, and, in serious cases, criminal prosecution and imprisonment.

CBP has sophisticated analytical and enforcement capabilities that allow it to identify suspicious trade patterns. These capabilities include analyzing shipment data, manufacturing capabilities by country, historical import activity, and the trading patterns of individual companies.

Importers are ultimately responsible for exercising appropriate due diligence to understand where their merchandise is manufactured and ensuring that country-of-origin information is accurately declared to CBP at the time of importation.

If an importer has reason to believe that a supplier may be engaging in transshipment or misrepresenting the origin of merchandise, it should take immediate steps to investigate. If the practice is confirmed, the importer should take appropriate corrective action, including addressing the issue with the supplier, evaluating alternative sourcing options, and fulfilling any applicable reporting and disclosure obligations.

Waiting for CBP to identify these practices during an audit or investigation can have serious consequences for the company. Importers should take a proactive approach to supply chain oversight rather than assume that responsibility for origin compliance rests solely with their suppliers.

The Bottom Line

The regulatory environment for U.S. importers continues to evolve, and CBP is placing increasing emphasis on importer accountability, data accuracy, supply chain transparency, and enforcement. Companies should not wait until a shipment is delayed, an audit is initiated, or a compliance issue is identified by CBP before taking action.

Now is the time to review importer registration information, evaluate supply chain practices, verify country-of-origin declarations, and work closely with your customs broker and trade compliance professionals to ensure your company is prepared for what comes next.

John Boomhover
Director of Compliance & Customs Services
CV International, Inc.