Pre-arrival/Pre-load Commercial Information AMPS

October 2013 Pre-Border Programs Directorate Programs Branch

Purpose

• This presentation provides background and details relating to the implementation of penalties for contravention of pre-border commercial requirements within the CBSA Administrative Monetary Penalty System (AMPS).

• The design and structure of the penalties are based on future and existing legislation and regulations pertaining to pre-load and pre-arrival commercial information. The penalties were developed with the assistance of the Compliance Programs Unit - Border Programs (AMPS OPI) and respect existing CBSA policies while acknowledging the unique nature of advance commercial information requirements.

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Accuracy and Fairness Mechanisms

 To promote accuracy of application, fairness, and client outreach it is intended that new penalties related to ACI/eManifest be issued exclusively by the Advance Commercial Information Policy Unit , Pre-Border Programs utilizing both post-arrival compliance monitoring and mechanisms for regional operational referral of non-compliance.  Penalty issuance will be centralized until analysis of penalty impacts is completed, eManifest is fully implemented, and a post implementation review is completed.  This will facilitate increased compliance through the implementation of a spectrum of CBSA interventions, ranging from client outreach via monitoring, client action plans, application of penalties, and ultimately suspension of carrier codes in the most serious cases.

Accuracy and Fairness Mechanisms (cont’d)

 Severity and frequency of non-compliance will be taken into account in determining progression and application of corrective actions.

 In order that non-compliance is met with an appropriate CBSA response, case by case analysis of the nature and history of infractions will be carried out.

 As CBSA pre-arrival requirements evolve with implementation of eManifest, measures have been taken to assist client compliance through monitoring and outreach. Structured in a tiered format, monitoring efforts vary in their complexity and depth based on client compliance history and responses to previous monitoring efforts.

Accuracy and Fairness Mechanisms (cont’d)

 The CBSA encourage clients to identify errors, omissions, or other non-compliance as soon as they are aware, and to provide updated accurate information immediately. If a voluntary correction is made to ACI data before an investigation, exam or audit has been initiated by the CBSA, ACI AMPs will not be applied with respect to the submission voluntarily identified by the client.  The CBSA’s monitoring process may identify patterns where excessive voluntary corrections are being made. This could result in client outreach and action plans in order to rectify the underlying issues resulting in frequent amendments/corrections.

 Clients are encouraged to implement internal processes ensuring that they are aware and capable of correcting information submitted to the CBSA.

AMPS Background

• The Administrative Monetary Penalty System (AMPS) is a civil penalty regime that secures compliance with customs legislation through the application of monetary penalties.

• AMPS authorizes the CBSA to assess monetary penalties for non compliance with customs legislative, regulatory and program requirements.

• Pre-arrival requirements are based on Section 12.1 of the

Customs Act

. Currently penalties do not apply to contraventions of this section of the Act or the

Reporting of Imported Goods Regulations

.

• Supporting amendments to the

Reporting of Imported Goods Regulations, Designated Provisions Regulations

and

Customs Act

are in their late stages of review.

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Determination of the Risk Type

• A - International Commitments  May result in Canada’s inability to live up to its commitments.

(Ex: Significant exportations of CITES protected animal and flora, Unlawful importations with international trade agreement frameworks, A tariff misclassification of goods subject to trade agreement ) • B - Economic  May result in damage to the Canadian economy through loss of data integrity or revenue and/or market imbalance.

(Ex: Reporting inaccuracies that skews Statistics , failure to account for goods, large scale dumping, reporting inaccuracies) • C - Health and Safety  May result in endangering Canadians’ food and health by introducing disease, hazardous / toxic agents and/or pests.

(Ex: Importation of large quantities of tainted produce, Introduction of pests or disease into Canada, Importation of non approved pharmaceuticals and or illicit drugs, importation of substandard steel, importation of wrongly classified wood) • D - National Security  May pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

(Ex: Importation of illegal weapons, Importation of components used for the making of bombs, Importation of seditious, treasonous or pornographic material, Importation of hate propaganda, Importation of illicit drugs) 7

Determination of the Risk Impact

•

Level 1 = VERY LOW

 An impact, the consequences of which can be absorbed through normal activity •

Level 2 = LOW

 An impact where consequences can be absorbed, but management effort is required to minimize impact •

Level 3 = MODERATE

 A significant impact that can be managed under normal circumstances •

Level 4 = HIGH

 A critical impact that, with the proper management, can be endured •

Level 5 = VERY HIGH

 A major impact with the potential to lead to long-term damage 8

Determination of Penalty Amounts – The AMPS Penalty Grid

Very High 5 High 4 Moderate 3 Low 2 5A $3,200 $1,600 $800 4A $1,600 $800 $400 3A $600 $300 $200 2A 1A $300 $150 $100 5B $4,800 $2,400 $1,200 4B $2,400 $1,200 $600 3B $900 $450 $300 2B 1B $450 $225 $150 5C $6,400 $3.200

$1,600 4C $3,200 $1,600 $800 3C $1,200 $600 $400 2C 1C $600 $300 $200 5D $8,000 $4,000 $2,000 4D $4,000 $2,000 $1,000 3D $1,500 $750 $500 2D $750 $375 $250 1D Very Low 1 Warning $0 Warning $0 Warning $0 Warning $0 International Commitments A Economic B Health and Safety C CRITERIA National Security D 9

Five Proposed Penalties

Each new penalty is intended to apply to all submission requirements and all trade chain partners responsible for pre-arrival/pre-load information; including the provision that multiple penalties may be issued per shipment if multiple trade chain partners are in contravention of their respective requirements.

1. Failing to provide advance information 2. Failing to provide advance information in the prescribed time or in the prescribed manner 3. Failing to correct advance information 4. Failing to provide true/accurate/complete information 5. Failing to comply with an electronic customs Risk Assessment notice 10

Failure to Provide Data

 The responsible party failed to send the prescribed information relating to specified goods to be transported to Canada.

 Penalty is applied per required pre-arrival submission.

 Risk Level: 5D • Very High/National Security: A major impact with the potential to lead to long-term damage which may pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

Penalty rate (1st, 2nd, and 3rd level): $2000, $4000, $8000 • No risk assessment can be performed and the CBSA may be unaware of the pending arrival of cargo or conveyance if no information is submitted pre-arrival, effective management of this risk is challenging without prior notification.

Timeliness or Manner

 The responsible party failed to submit advance information in the prescribed time or prescribed manner to the Agency.

 Penalty is applied per required pre-arrival submission.

 Risk Level: 2D • Low/National Security An impact where consequences can be absorbed, but management effort is required to minimize impact. May pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

Penalty rate (1st, 2nd, and 3rd level): $250, $375, $750 • Insufficient review time or submission in an unprescribed manner present a threat to national security due to impacts on pre-arrival risk assessment processes. These risks can be absorbed through work flow management or data entry into appropriate systems.

Corrections

 The responsible party failed to notify the Agency within prescribed timeframes and without delay of any correction to any pre-arrival or pre load information sent to the Agency (to be used when original submission was true/accurate/complete but circumstances changed since transmission).

 Penalty is applied per required pre-arrival submission.

 Risk Level: 3D • Moderate/National Security: A significant impact that can be managed under normal circumstances which may pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

Penalty rate (1st, 2nd, and 3rd level): $500, $750, $1500 • Failure to correct submitted information results in flawed and incomplete risk assessment. This can be managed through reference to related cargo or conveyance information, or through additional customs intervention upon arrival since the CBSA will be aware that the goods are destined for Canada.

True, Accurate and Complete

 The responsible party submitted information prescribed by the Reporting of Imported Goods Regulations that was not True, Accurate, and Complete.

 Penalty is applied per required pre-arrival submission.  Risk Level: 3D • Moderate/National Security: A significant impact that can be managed under normal circumstances which may pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

Penalty rate (1st, 2nd, and 3rd level): $500, $750, $1500 • Submission of information which is not true, accurate, and complete results in flawed and incomplete risk assessment. This can be managed through reference to related cargo, conveyance, or importer information, or through additional customs intervention upon arrival since the CBSA will be aware that the goods are destined for Canada.

Electronic Risk Assessment Notification

 The responsible party failed to comply with a notification issued by the Agency regarding goods on board or expected to be on board the conveyance.

 Penalty is applied per required pre-arrival submission.

 Risk Level: 5D • Very High/National Security: A major impact with the potential to lead to long-term damage which may pose danger to Canada’s sovereignty, borders, defences and/or public and government institutions.

Penalty rate (1st, 2nd, and 3rd level): $2000, $4000, $8000 • Electronic risk assessment notices are transmitted to the submitter of pre arrival and pre-load information in response to identified risks and can either direct the handling of goods or request further information. Non-compliance with electronic notices limits options available to the CBSA in identifying and mitigating risks.

Penalty Assessment

   Penalties will be applied on a per shipment basis, with contraventions related to individual shipments having a penalty applied once per contravention type per responsible party.

The forthcoming amendments to the

Reporting of Imported Goods Regulations

will clearly identify pre-arrival/pre-load requirements as pertaining to three separate Trade Chain Partners: Carriers, Freight Forwarders, and Importers; each with their specific obligations.

Each shipment could be subject to multiple penalties to multiple trade chain partners as applicable; however, no one trade chain partner will be subject to multiple instances of the same penalty per shipment.

 For example: if for a single shipment multiple errors are made with respect to the truth, accuracy and completeness in each of the Conveyance Report (carrier obligation), house bill report (freight forwarder obligation), and Advance Trade Data (importer obligation): each of the carrier, freight forwarder, and importer may receive a single “True, Accurate, Complete” penalty.

Implementation Schedule

 Issuance of penalties requires that the appropriate Legislative, Regulatory and Systems framework be in place. The below table outlines when the appropriate Regulations and CBSA systems will be in place.

 Two similar but distinct penalties will be in place for each contravention: one being the full penalty amount, the second is intended as a zero rated (otherwise identical) penalty for use during a 6 month grace period as new pre-arrival requirements come into force (Advance Trade Data (importer), house bills (freight forwarders), etc).

Coming into force date

(Primary client impact)

Regulation coming into force date

(Carrier)

July 1, 2014

(Freight Forwarder)

July 1, 2015

(Importer)

July 1, 2015

(Re-manifest)

Grace period start date

Regulation coming into force date July 1, 2014 July 1, 2015 July 1, 2015

Grace period end date

+ 6 Months January 1, 2015 January 1, 2016 January 1, 2016

Thank you

Questions or comments can be directed to: [email protected]

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