U.S. Customs Proposes New Regulations for Customs Broker Verification of an Importer's Identity

U.S. Customs and Border Protection (CBP) has issued a notice of proposed rulemaking to require Customs brokers to collect certain information from importers to enable the brokers to verify the identity of importers, including nonresident importers.

The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) requires that CBP issue regulations governing the Customs broker identification of importers. The proposed rule would satisfy this requirement by establishing and standardizing the identity collection criteria and creating a required verification process of importer clients. Additionally, the regulations identify procedures for the broker to follow in order to verify the authenticity of the information collected from the importer, require the broker to maintain records of the information collected to substantiate the importer’s identity, and empowers Customs to assess a monetary penalty of up to $10,000 for each violation for a broker that fails to collect the required information, as well as revoke or suspend the license or permit of the broker.

The proposed regulations state the broker must collect, at a minimum, the following information, if applicable, from the importer at the time the POA is obtained:

1. The client’s name

2. For a client who is an individual, the client’s date of birth

3. For a client that is a partnership, corporation, or association, the grantor’s date of birth

4. For a client that is a partnership, corporation or association, the client’s trade or fictitious names

5. The address of the client’s physical location (for a client that is a partnership, corporation, or association, the physical location would be the client’s headquarters) and telephone number

6. The client’s email address and business website

7. A copy of the grantor’s unexpired government-issued photo identification

8. The client’s Internal Revenue Service (IRS) number, Employer Identification Number (EIN) number, or Importer of Record (IOR) number

9. The client’s publicly available business identification number, e.g., DUNS number

10. A recent credit report

11. A copy of the client’s business registration and license with state authorities

12. The grantor’s authorization to execute the POA on behalf of the client

The broker will be required to independently verify each of the data points listed above. For example, the grantor’s authorization will need to be notarized whenever possible. Additionally, the broker will be required to check if the client is a sanctioned or restricted party, or if the client is debarred from doing business with the U.S. government.

A broker may not transact Customs business on behalf of the importer until the information is collected and verified. Brokers will be required to maintain records of the information used to substantiate the importer’s identity and must make the records available to Customs upon request.

For existing clients, brokers will have two years to verify this information for partnerships and three years for all other existing clients. Brokers will be required to reverify each client’s identity annually using the procedures outlined above.

When brokers verify the importer’s identity, CBP is better assured that importers are conducting legitimate trade transactions. By formalizing the verification process and requiring that a reverification process be carried out annually, CBP believes a broker’s knowledge of its importer client would be improved and would help prevent brokers from engaging in business with fraudulent companies. The proposed rule would reduce identity theft and counterfeit or IPR-violative imports, and would help enforce ADD/CVD laws, as well as reduce the importation of unsafe merchandise.

Comments on the proposed regulations are due by October 15, 2019.