Revised 5106 Needed to Help CBP Better Understand New IORs, Says CBP Official

What’s clear, though, is that with 20,000 to 25,000 new importers of record filed with CBP every month, the agency would like to have some better visibility into business practices, especially for importers that it has not previously dealt with, said Troy Riley, executive director of Commercial Targeting and Enforcement at CBP. CBP can use the information collected within the 5106 to compare the corporate information to a number of databases the agency uses, he said. The complexity and fluidity of the business relationships as part of imports is something that CBP needs to get a better handle on, and brokers create an obvious place to help in that, he said. The Advisory Committee on Commercial Operations Role of the Broker working group said last year it would hold off on developing recommendations for bona fides collections until the updated Form 5106 was released, due to likely overlaps (see 13111801).

Although CBP hopes to have wide-ranging information on each and every importer there will likely be some scenarios in which privacy is of major importance to legitimate importers, said Amy Magnus, director of Customs Affairs and Compliance at A.N. Deringer. For instance, Canadian non-resident importers “are very sensitive about privacy,” she said. The 5106 will largely cover the “known corporate world business activities,” but there will always be exceptions and it’s worth it to begin discussions on how to handle those exceptions, Riley said.

The planned relaxation of district permitting requirements “removes geographic boundaries” and allows CBP to make better use of the available technology, he said. “It may facilitate a number of your business models to do the same,” said Riley. But, “it may not. That’s your choice,” he said. CBP is still mulling over how to make sure a national permitting regime would not lessen the supervision and control, he said. The recommendation from the National Customs Brokers & Forwarders Association of America that the agency require one licensed broker for every 12 employees doing customs business (see 14072222) marks some useful agreement on the subject, he said. Still, just as CBP and the Office of Management and Budget will likely ask as the agency revises the regulations, it will be necessary to give some reasoning where the 1:12 ratio comes from, said Riley. It will also be important to take into consideration exactly what the updated regulations are trying to do, so the ratio doesn’t become just a box to check, he said.

The Broker Known Importer program, an NCBFAA-suggested voluntary program in which brokers will be able to “flag” to CBP that there’s been some discussion of basic importing practices with importer (see 14041502), will be another means to help CBP, he said. The role of the Known Importer flag remains an unknown, but that’s to be expected, said Riley. Exactly what CBP plans to do with that information is not yet clear, he said. CBP will first take a look at how much it’s used and the related compliance rates before it decides how much consideration it should give for the indicators, he said.

There seems to be the potential that brokers will be taking over a lot of the identification work for imports, said Heather Litman, a lawyer with Grunfeld Desiderio. Sometimes, the broker may be handling the 5106 information, Known Importer information and bona fides, she said. As a result, the broker regulations rewrite will need to show an understanding that brokers cannot take on too much risk and to spell out exactly “what is being facilitated” by having brokers handle this amount of information, she said.