Joint Presentation to FTA, LACBFFA and WIT-LA Wednesday ... FTA eBond and ISF...• CBP organized and hosted e-STB and eBond working group meetings: • December 2, 2013 focus on e-STB

Seminar This presentation is not open to the press and has a legal Copyright © June 2014

Joint Presentation to FTA, LACBFFA and WIT-LA

Wednesday, 6/11/14

This presentation is not open to the press and has a legal Copyright © June 2014

Introduction & Contacts

Lisa Gelsomino, President/CEO–Avalon Risk Management, NCBFAA ISF Committee, TSN eBond • Lisa is a founding partner of Avalon and has over 25 years experience in the international trade industry. • Lisa is also Avalon’s corporate insurance license holder and pursuing her CPCU, ARM and CCS designations. • Lisa graduated Magna Cum Laude with a B.S. in Business and received her M.B.A. from Northwestern University • Since 2009, Lisa has served on the COAC Bond Working Group, NCBFAA ISF sub-committee, TSN eBond sub-

committee, board of ITSA and various other trade and surety associations. • She has helped CBP conduct ISF and eBond outreach to over 3,000 trade participants • Lisa can be reached at 847-700-8192 or [email protected] • Hotline: 847-700-TISF(8473)

Anne Maricich, Assistant Director Trade – Los Angeles Field Office Director of Electronics Center of Excellence and Expertise – LA Field Office • Ms. Maricich’s responsibilities include trade facilitation and trade enforcement for international cargo clearances

and managing the Electronics CEE based at the LA field office. • Prior to her appointment in LA, Ms. Maricich spent over 6 years at CBP HQ and began her career with CBP as an

Auditor serving both Philadelphia and San Diego. • Ms. Maricich graduated Suma Cum Laude with a B.S. in Accounting and is a Certified Public Accountant • Ms. Maricich can be reached at 562-256-8885 or [email protected]

Dan Meylor, Moderator and Vice-Chair of the NCBFAA Customs Committee • Dan Meylor began his career in 1971 as a messenger at LAX and joined Carmichael International Service (an

APL Logistics Company) in 1996 where he is now the Customs Administration Manager for Carmichael. Dan became a licensed broker in 1974 and is active in many trade organizations.

• Dan is Past President of the LACBFFA and currently serves as the Chair of the LACBFFA Seaport CBP Committee, and Vice-Chair of the NCBFAA Customs Committee, and serves on the Board of Directors of NCBFAA. Dan is also the co-Chair of the Pacific Coast Council Import Committee.

• Dan can be reached at 213-353-0800 or [email protected]

mailto:[email protected]



http://www.cbp.gov/trade/trade-community/outreach-programs/revenue Avalon eBond Page - http://www.avalonrisk.com/ebond.html

Bruce Ingalls Director, Revenue Division Financial Operations Office of Administration (Indy) • 317-298-1107 • [email protected] • Refer to CBP Website Below

Kara Welty Debt Management Chief Revenue Division, Financial Ops Office of Administration (Indy) • 317-614-4614 • [email protected]


http://www.cbp.gov/trade/trade-community/outreach-programs/revenue





http://www.avalonrisk.com/ebond.html









CBP Revenue Division Topics

• Revenue Modernization

• Bond Centralization

• eBond by 1/3/15

• PM Statement

• Bond Sufficiency

• Bad Address

• Duty Refunds (4811)

• Importer Sanctions

CBP Revenue Modernization

ISFs 33-40%



• Activity Code 1 – Importer/Broker (Entry/ISF)

• Activity Code 1a – Drawback

• Activity Code 2 – Bonded Carrier (Bonded Goods)

• Activity Code 3 – International Carrier (AMS/ACAS Filer)

• Activity Code 4 – Foreign Trade Zone (GPZ/Subzone)

Customs Bond (CBPF 301)

http://www.ecfr.gov/cgi-bin/text-idx?SID=662d537de28139931f46594e58c3f540&node=19:1.0.1.1.17.7.304.2&rgn=div8

http://www.ecfr.gov/cgi-bin/text-idx?SID=3fd56a2a0cbcc8e71d16a5ea36052a21&node=19:1.0.1.1.17.7.304.5&rgn=div8

http://www.ecfr.gov/cgi-bin/text-idx?SID=662d537de28139931f46594e58c3f540&node=19:1.0.1.1.17.7.304.3&rgn=div8



Continuous Bond Centralization

eSTB Bond Centralization • June 2011 DHS OIG report cited bond execution errors, deficiencies in bond

retention, and other issues that challenge CBP’s ability to collect on STBs.

• CBP has limited ability to report to Congress or Treasury on key inquiries regarding bonds.

• Enables CBP Officers to focus on trade and law enforcement mission and reduces the burden on Entry and Import personnel.

• Protects CBP by informing CBP Officers that a valid bond has been secured before cargo is released into commerce.

Trade Community Focus

• Brokers restricted to normal business hours to process bonds and entries

• Broker and Surety systems and processes are more modern and advanced than CBP’s systems, which leads to inefficiencies in accepting and processing STBs

• Standardizes the way CBP interacts with the Trade across ports

VIGILANCE SERVICE INTEGRITY

eBond Project Update


• CBP organized and hosted e-STB and eBond working group meetings: • December 2, 2013 focus on e-STB concept with limited discussion • April 2, 2014 finalize e-STB issues, start eBond discussions • June 11, 2014 TSN eBond Committee Meeting

• Key anticipated dates for eBond: • May 7, 2014 – Begin development of eBond (ACE Increment 6) • August 5, 2014 – Complete system development of eBond • January 3, 2015 – Planned deployment of e-STB and eBond in ACE

• OA and ACE Business Office continue to engage CBP and Trade to refine user requirements gathered over the last several years and prepare for development of user stories for system development.

• Process under eBond (continuous bond) will remain largely the same; continuous bond submissions will not be tied to an individual entry and Surety will still submit bond to CBP.

eBond High Level Data Flow


SNP + CX Message

Surety Sends

Reject

eSTB Bond Data Elements:

http://www.avalonrisk.com/pdf/eSTB%20Process%20Flow%20and%20Data%20Elements%20New.pdf

http://www.avalonrisk.com/pdf/eSTB Process Flow and Data Elements New.pdf

eBond ACE Development (Part 1)


Develop Bond Intake System (Increment 5) Provide capability to receive a bond submission via EDI

Provide capability to validate the information received in the bond submission.

Provide capability to store bond information received for use in additional processes.

Provide capability to return a positive or negative response to the surety via EDI.

Begin building ACE Portal Functionality for Bonds (Increment 5) Provide a Bond search screen for Trade

Provide a Bond view screen for Trade

Provide a Bond search screen for CBP

Provide a Bond view screen for CBP

Surety Portal 1) Submit information 2) Surety review 3) Transmit Data Elements 4) Riders 5) Terminations

CBP Desired Outcomes and Impacts


Dedicated Resources with Specialized Knowledge and Expertise – Smaller group of dedicated resources focused primarily on the STB program promotes faster processing and responsiveness to issues and questions raised by the Trade.

Faster STB Processing for the Trade – Brokers and sureties will not have to duplicate efforts to complete paper STBs for data already in their own systems.

Expanded Entry Capabilities for the Trade – Automated STB submission and validation will permit 24/7 bond filing so the Trade does not have to wait for ports to open for business.

Automates Labor-Intensive STB Validation by CBP – Electronic submission and validation can expedite cargo release without increasing risk and free up resources in the field. Based on annual STB volumes (300,000 – 750,000) and avg. manual processing times (6.5 minutes per bond), could save estimated 32,500 – 81,250 man hours (15-39 FTEs) per year.

Save Time and Expedite Trade

Reducing Protests, Write-offs, and Rejections – Improved consistency in the application of STB policies and procedures will drive down potential revenue losses. CBP will have perfected STBs in-hand in all cases prior to cargo release.

Improve Collections for CBP


Scope of eBond in ACE

• Updated CBP 301 Bond Form 99% of all Customs Bonds

• Out of Scope: Activity Code 12 (ITC), 14 (IBEC), 15 (IPR) and 17 (MTO)

• ACE ABI CATAIR Chapters for the Future Deployment of ACE eBond http://www.cbp.gov/trade/ace/catair • Appendix G Condition Codes and Text (updated to include eBond error codes and conditions) • ACE CATAIR Error Dictionary (Updated to reflect future deployment of ACE eBond) • Customs eBond Create/Update ACE CATAIR Chapter

Activity Code STB Continuous CTB Count

1 – Importer or Broker x x 174,731

1a – Drawback x x 1,049

2 – Custodian of Bonded Merchandise x 5,770

3 – International Carrier x x 5,911

3a – Instrument of International Traffic x 807

4 – Foreign Trade Zone Operator x 862

5–10 (Public Gauger, Wool/Fur, B/L, Detention, Court Costs) x N/A

11 – Airport Security x 510

16 – ISF x x 142

http://www.cbp.gov/sites/default/files/documents/CBP Form 301_0.pdf.

http://www.cbp.gov/trade/ace/catair

http://www.cbp.gov/document/guidance/appendix-g-condition-codes-and-text-updated-reflect-future-ebond-error-codes-and

http://www.cbp.gov/document/guidance/ace-catair-error-dictionary-updated-include-ebond-error-codes-and-conditions


http://www.cbp.gov/document/guidance/customs-ebond-createupdate-catair-chapter


eBond 19CFR113 Rewrite

• 19CFR113 updated to eliminate paper requirement

– Sureties have “absolute” liability; no execution defenses

– Revised Letter of Application Requirements

– eBond will accommodate eRiders and eTerms

– Termination notice will change (from 10/30 to 15 days)

• Recordkeeping requirements (19CFR113.15) – There will be no paper bond record, only data elements – Customs Assigned Bond# will change from 9 to 10 digits

• 5106 Revisions – CBP developing new form, more data on new importers – CBP building a web portal to input information – Look for FRN in 2014

http://www.ecfr.gov/cgi-bin/text-idx?SID=e275bcbf29e642d9f1f77c7a91405792&node=19:1.0.1.1.17&rgn=div5

http://www.ecfr.gov/cgi-bin/text-idx?SID=e275bcbf29e642d9f1f77c7a91405792&node=19:1.0.1.1.17&rgn=div5


• Bond Amount: (Customs Directive 099 3510-004)

• Bond Sufficiency: Reviewers vs. Analytical Formula

Duties, Taxes & Fees x 10%

(previous 12 months)

+

10% - unpaid bills not protested and less than 210 days or protested

+

$ - delinquent bills not protested and over 210 days or denied protest

+

$for unpaid debit vouchers

+

$paid by surety

= minimum bond amount or $50,000 (rounded up by increments of $10,000, up to $100,000

and then by increments of $100,000)

+

Exact Amount

+

Exact Amount

+

Exact Amount

+

Exact Amount

B

A

C

D

E

B A C D E Total Amount = + + + +

Determining Bond Amounts

http://www.cbp.gov/sites/default/files/documents/3510-004_3.pdf



http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/bonds/pilot_program/bond_form.ctt/bond_form.pdf


Bond Insufficiency Reviews


Bad Importer Address

• Effective 4/8/14: CBP will render importer’s continuous bond insufficient for returned mail

• ACE Surety Portal: Avalon receives weekly notices

• Change in Mailing Address: CBP Form 5106

• Change in Physical Address: Bond Rider + CBP Form 5106

• What if Address is Correct? Letter from Importer http://www.cbp.gov/trade/trade-community/outreach-programs/bonds/bond-program/information/insufficient-bonds

• eBond Benefits – Sureties have agreed to match on IOR# – Eliminates needs for Name or Address Riders – Should help avoid many rejections we see today

http://campaign.r20.constantcontact.com/render?ca=cba08fae-faf5-4a7a-8f42-8ca17505f7da&c=f1597160-abe8-11e3-956a-d4ae528442b5&ch=f20e1b60-abe8-11e3-95a8-d4ae528442b5

http://www.cbp.gov/sites/default/files/documents/CBP Form 5106 %2805-13%29.pdf

http://www.cbp.gov/sites/default/files/documents/CBP Form 5106 %2805-13%29.pdf

http://www.cbp.gov/trade/trade-community/outreach-programs/bonds/bond-program/information/insufficient-bonds










Periodic Monthly Statement

• 20,000 ACE accounts

• 68% of all duties/fees

• Over $1.6 billion in duties

• Automates payment

• Up to 600/day

• 60 Day Delay

• 40% Rejected ― No CTB on File

― Bad Address

― Authorization

― Do not request multiple times, only adds to workload and delay http://www.cbp.gov/document/fact-sheets/ace-periodic-monthly-statements-fact-sheet

http://www.cbp.gov/document/fact-sheets/ace-periodic-monthly-statements-fact-sheet














Duty Refunds and CBP 4811

• Importer Sanctions (lose immediate entry privileges)

– Obligation to pay duty is “absolute” under laws

– Unpaid Increased Duty Bills at 210 Days

– Debit Vouchers

Questions?

John Everett ACE Business Office Office of International Trade IT Alexandria Office • 571-468-5399 • [email protected] • Refer to Links Below

William R. Slusher ACE Technical Lead ACE Business Office IT Alexandria Office • [email protected]

http://www.cbp.gov/trade/ace/catair Customs eBond Create/Update ACE CATAIR Chapter ACE CATAIR Error Dictionary (Updated to reflect future deployment of ACE eBond) Appendix G Condition Codes and Text (updated to include eBond error codes and conditions) Avalon eBond Page - http://www.avalonrisk.com/ebond.html





http://www.cbp.gov/document/guidance/customs-ebond-createupdate-catair-chapter


http://www.cbp.gov/document/guidance/appendix-g-condition-codes-and-text-updated-reflect-future-ebond-error-codes-and





New ISF Enforcement Policy


M. Craig Clark, Program Manager – CBP Headquarters Office of Cargo and Conveyance Security (OFO) • As Program Manager, he is national point of contact for all ISF matters • Mr. Clark can be reached directly at 202-344-3052 or [email protected] • Or send questions to [email protected] • Refer to CBP ISF website for current information


http://www.cbp.gov/border-security/ports-entry/cargo-security/importer-security-filing-102

100% Cargo Screening


SAFE Port Act of 2006

• 100% scanning by NIIs at foreign port prior to arrival

• $8 million x 2,100 shipping lanes at over 700 ports

• July 1, 2012 Deadline

• July 1, 2014 two-year waiver expires

• DHS asking Congress for two more years, show Risk Based Approach is working.

CBP’s Risk Based Approach

• Less than 1% of incoming containers is illicit cargo (Congressional Report 4/13)

• C-TPAT secures supply chain

• Container Security Initiative (CSI) at 60 ports that handles 80% of cargo to US

• ISF 10+2 rule targets cargo before it arrives in the U.S.

http://www.strtrade.com/news-publications-100-percent-cargo-container-scanning-060214.html
















ISF Action Date

ISF Proposed Rule (NPRM) 01/02/08

ISF Interim Rule 01/26/09

“Flexible” Enforcement 01/26/09

“Informed Compliance” 01/26/10

CBP FAQ 07/09/10

ISF Enforcement 07/09/13

ISF Enforcement Guidance 05/13/14 CBP FAQ on ISF Guidance 05/18/14

NPRM (ISF-5) TBA ISF Final Rule ETA of 8/14

ISF Document

1st notice of ISF bonds CBP 19CFR149(b)

CBP ISF Interim Rule

CBP ISF Web Page

CBP ISF Mitigation Guidelines

CBP FAQ (updates pending with OR&R)

CBP CSMS Enforcement Message

CBP CSMS #14-000283 ISF Enforcement CBP FAQ dated 05/18/14

Questions or comments to: [email protected]

ISF Timeline & Updates


http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201310&RIN=1651-AA98




http://www.ecfr.gov/cgi/t/text/text-idx?c=ecfr&SID=fda062394869788c89ad040f9ae54780&rgn=div5&view=text&node=19:2.0.1.1.9&idno=19

http://www.gpo.gov/fdsys/pkg/FR-2008-11-25/pdf/E8-27048.pdf




http://www.avalonrisk.com/questnewsletter/news/mitigation.pdf

http://www.cbp.gov/sites/default/files/documents/10_2faq_0.pdf


http://apps.cbp.gov/csms/csms.asp?srch_argv=13-000298&srchtype=all&opt=1





http://www.cbp.gov/sites/default/files/documents/Addendum to FAQ_Updated ISF Enforcement Strategy.pdf


ISF by the Numbers

January 26 – November 23, 2009

3.4 million ISF-10s

1,900 ISF Filers (90% customs brokers)

99,700 ISF importers on file

95% importers filing ISF

6,000 vessel stow plans

101 million container status messages

January 26 – September 21, 2010

6.2 million ISF-10s

2,350 Filers

194,000 ISF importers on file

97% importers filing ISF nationally

82% compliance in NY/NJ January 01, 2013 – December 31, 2013

10,508,000 ISF-10s / 4.31M as of 5/30/14

2,500+ Filers (remains constant in 2014)

264,000 + ISF importers on file

90%+ importers filing ISF nationally

22,000+ vessel stow plans

369+ million container status messages


ISF Statistics and Updates

Bond Statistics

10,508,000 ISFs in 2013

74,000 ISF-D Singles/Year (estimate)

99% of ISFs filed against CTBs

2014 Statistics

4,310,000 ISFs through 5/30/14

12,300,000 ISFs since 7/9/13

13-14M ISF-10s estimated annually

What about ACE Cargo Release?

Ocean shipments effective 1/4/14

Deployment C released 4/5/14

Will certify summary for release

ACE Cargo Release “will not replace ISF, but it will allow the filer to fulfill the ISF requirements. The approach is that if we have the data in the system, the trade will not have to send it again. CBP cannot say when this will be operational…it may be after Deployment C or a separate deployment just for the ISF integration.”

Per COAC meeting in May, the July 2014 deployment will include ACE Cargo Release (previously simplified entry) that will allow the Entry and ISF to be filed in ACE (unified entry) provided Entry and ISF data elements are available and filed on a timely basis. http://www.cbp.gov/document/guidance/ace-development-and-deployment-schedule

http://www.cbp.gov/sites/default/files/documents/deploymentABC_infographic_2-27-14.pdf

http://www.cbp.gov/document/guidance/ace-development-and-deployment-schedule










Cargo & Conveyance Security

Augustine Moore

Acting Executive Director

Chris Kennally

Deputy Executive Director

John Landers

Director, Cargo Control

Craig Clark

Program Manager

Regina Park

ACAS Manager

7 other staff members =

12 total

• Dan Baldwin retired 12/31/13

• Todd Hoffman was Acting Executive Director for 5 months

• Effective 5/13/14, Augustine Moore now Acting Executive Director

• John Landers became Director effective January 2014.


New ISF Enforcement Guidance

ISF Enforcement

Cargo Holds Updated policy remains the same

Does not always mean an NII

Rarely means full inspection

Liquidated Damages Effective 5/13/14

Informed compliance outreach 3 warnings before port will issue

a liquidated damage claim


Ocean Volume – Impact on ISF

Per Zepol’s 2013 U.S. Port Report: LA/Long Beach is 54% of top 20 volume West Coast: 70% of volume of top 20 volume

HOLY Smokes! It’s the

dreaded ISF Cargo Hold

AGAIN!


ISF Enforcement on Local Level

Each port will implement based on local needs/resource

Port Date

LA/Long Beach 07/12/13

NY/NJ 07/19/13

Seattle 07/22/13

San Francisco/Oakland 07/25/13

Baltimore 08/05/13

Original ISF Enforcement Notices, nothing new to date

Port Notice Link

LA 13-026 Public Bulletin

Pipeline 13-027-NWK

CBP Trade Information Notice 13-17 WA

Notice 782-13-09

BWI Port Information Notice 2013-16

For example, LA/Long Beach

• Updated policy maintains local discretion at the port level based on infrastructure and staffing resources (placing cargo holds on freight vs. issuing LD claims).

• Non-compliant volume is high in LA/LB

• Holding LCL cargo effective 10/7/13 on ISFs not filed 48 hours prior to arrival in the U.S.


http://www.avalonrisk.com/questnewsletter/news/LA13-026ISF.pdf



http://www.avalonrisk.com/questnewsletter/news/NY-13-027ISF.pdf





http://www.avalonrisk.com/questnewsletter/pdf/CBP-TIN-13-17.pdf



http://nsvirtualurl.com/app/crm/marketing/campaignlistener.nl?__lstr=__cl&c=723493&__h=f5a2ffaa5f89b73e1fd5&__r=397914&eou=aHR0cHM6Ly9zeXN0ZW0ubmV0c3VpdGUuY29tL2NvcmUvbWVkaWEvbWVkaWEubmw_aWQ9NDA2NTQmYz03MjM0OTMmaD03NWNhMWExMWJkMWZlYzNkZjgwYSZfeHQ9LnBkZg**&_od=aHR0cHM6Ly9mb3Jtcy5uZXRzdWl0ZS5jb20*&url=https://system.netsuite.com/core/media/media.nl?id=40654&c=723493&h=75ca1a11bd1fec3df80a&_xt=.pdf







http://www.avalonrisk.com/pdf/BWI-ISF-info.pdf




• Since 7/9/13, non-compliant ISFs subject to cargo holds in ACE

• The updated ISF enforcement guidance does not change this

ISF Enforcement - Cargo Holds

• When is CBP using ISF cargo holds? (<1% of cargo) – When ocean cargo arrives without an ISF

– When ISFs are filed “significantly” late (as defined by port policy)

– Entry cannot be made at ocean port without an ISF

– Sent to G.O. if entry is not made (manual cargo holds)


• 2Q Hold Code = Carrier Hold Overseas – At this time, should only be used when there is a threat to national security.

– Contact CBP-HQ ([email protected]) if 2Q is used for non-compliance reasons only.

– Carriers are not responsible to police ISF compliance.


• Targeting/Security Assessment – Each port has its own process for handling manual cargo holds.

– Some ports do not have facilities to strip consolidated cargo when cargo is held, so a single late ISF can delay an entire container.

– CBP does not compare ISF (6-digit) to Entry data (10-digit); however, this may be reviewed during a hold/inspection—security data is the concern

– After 3 violations, Liquidated Damages could be assessed in addition to or instead of cargo holds (varies by port).



• B/L commonly known as the “11th data element.”

• B/L required as part of the ISF transmission – ISF Importer must provide B/L to lowest common denominator

– ISF Filer must query ACE to secure a B/L match (auto query for 60 days)

– This links ISF to Customs manifest in ACE to be visible to CBP

• CBP cannot target ISF without a B/L match – CBP needs match prior to arrival to conduct targeting

– Failure to match prior to arrival may result in cargo hold

– A B/L mismatch is an inaccurate ISF

– Liquidated damage claim possible

– Potential for 2 LD claims, late ISF and inaccurate ISF if untimely B/L match

– Cap is $10,000/any one ISF transaction

Bill of Lading Match in ACE


Carrier Cargo Hold Data

• Port of Delivery Holds in 2014 – 698 total, average 34 per week

– 687, no ISF on File (98.5%)

– 11, ISF on file, (1.5%) but the data contains some type of compliance issue, and CBP placed a hold for further review

– Majority of POD Holds in Long Beach/LA, ORF, OAK

– Over 50% reduction from 2013, down from 78 per week

• Port of Loading Holds in 2014 – 6 Do Not Load due to No ISF on File

– Placed in error, removed when CBP was notified

• 704 ISF Holds in 2014 – 490 (70%) did not have exams

– 204 (29%) had NIIs

– 10 (1%) had intensive exams

Fewer EXAMS


• Local Policy in LA/Long Beach – LA holds cargo without an ISF on file at least 48 hours prior to arrival

– LCL Cargo: CBP places “2O” hold at HB/L level to hold container at terminal

– When CBP sees the electronic PTT, they will override the ISF hold with a “1W” authorization to transfer the goods to the CFS. • Note: CBP will remove the hold only after they have issued the manual hold to the CFS

and acknowledged back.

– CBP will place a “2O” hold on House B/Ls in the container(s), but when the in-bond entry is authorized in M1, CBP will override the hold with a “1J” in-bond authorization so cargo can move.

• Other Port Practices

• Questions/Discussion



• Delays and Extra Costs for Importers – Inventory carrying costs could be 2-5 day shipment delay

– Costs for holding freight at origin or destination if ISF missing or late

– Costs for non-intrusive inspection (NII) or exam plus all applicable fees

– Exam charges must be paid before cargo is released

• Best Practices – File ISF timely, file updates until cargo’s arrival per 19 CFR 149.2(d)

– ACE B/L match 48 hours prior to cargo arrival for targeting purposes.

– Load cargo that has ISF acceptances in same container.

– Consolidate with other C-TPAT cargo as best practice.

– C-TPAT members can search C-TPAT Status Verification Interface

– A Flexible Filing (FR, FT, FX) must be updated 24 hours prior to cargo arrival as a Compliant Transaction (CT).

ISF Cargo Hold Exposures

http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=fda062394869788c89ad040f9ae54780&rgn=div8&view=text&node=19:2.0.1.1.9.0.2.2&idno=19

http://www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-customs-trade-partnership-against-terrorism/status-verification



KaPoW! We must ZAP Out THOSE costly

liquidated damage claims!


New ISF Enforcement Effective 5/13/14

Vessel Stow Plan

Container Status Message (CSM) Data

1. Booking Party name/address

2. Ship to Party

3. Commodity HTS-6

4. Foreign Port of Unlading

5. Place of Delivery

(FROB*, IE, TE)

ISF-10 “U.S. Bound” Cargo

24 Hrs Prior to Lading*

(3461 Entries, IT, FTZ)

1. Importer of Record or FTZ Number 2. Consignee Number(s) 3. Seller (Owner) name/address 4. Buyer (Owner) name/address 5. Ship to Party name/address 6. Manufacturer (Supplier) name/address 7. Country of Origin 8. Commodity HTS-6 digit level

9. Container Stuffing Location 10. Consolidator (Stuffer) name/address

ASAP, But NLT 24 Hrs Prior to Arrival

ISF-5 “Transit” Cargo

24 Hrs Prior to Lading*

*FROB ISF-5 is required anytime prior to lading

Carrier Requirements

NLT 48 Hrs After Departure*

w/in 24 Hrs of Creation or Receipt

*Anytime prior to arrival for voyages less than 48 Hrs

For all vessels carrying containers

ISFs must contain the lowest bill of lading number (i.e., regular or house B/L) as referenced in the Automated Commercial Environment (ACE).

*Must be linked together as a line-item at the ISF shipment level

*ISFs for “exempt” break bulk shipments are required NLT 24 hrs prior to arrival



• Types of Violations for Liquidated Damages – $5,000 per Late File (15-20% of ISFs filed late)

• Includes Non File, these are considered Late Files (even if no bond on file)

• CBP’s primary focus, all ISF claims issued to date were due to Late ISFs

– $5,000 per Incomplete/Inaccurate ISF

• Missing Information or B/L

• B/L Mismatch

– $5,000 per Incorrect/Incomplete ISF Update

– $5,000 per ISF not Withdrawn/Deleted

– $10,000 maximum per any one ISF Transaction

• ISF Penalty Provisions – ISF Importer Penalties under 19 U.S.C. 1595a(b) = value of cargo

ISF Enforcement – Liq Damages (Importers)

http://www.gpo.gov/fdsys/pkg/USCODE-2010-title19/html/USCODE-2010-title19-chap4-subtitleIII-partV-sec1595a.htm


• ISFs must still be filed:

– Timely: Vessel Departure Message – 24 Hours (local time) • CBP does not hold the importer responsible if the VDM was not

provided by the carrier

– Completely/Accurately • B/L Match is major concern (can make ISF appear to be missing)

• Updating a Flexible Filing to CT at least 24 hours prior to arrival

• Liquidated Damages May Be Assessed: – ISF importer has more than 3 violations

• Regardless if an LD claim could have been issued (no bond on file)

– 3 violations starts from 5/13/14 and ends 5/13/15

– 3 violations are based on ISF importer, not by port or filer

ISF Enforcement – Liq Damages


• Three Warnings to Violating ISF importer

– Before CBP will pursue a liquidated damage claim

– Importer must have a bond for a claim to be issued

• Informed Compliance Outreach

– Email, Telephone, or Letter (no plans to copy surety or CHB)

– CBP will have greater visibility to repeat violators

– Expose geographic areas requiring more outreach

• How Will CBP Track Violations?

– CBP will use an internal database visible nationwide

– CBP HQ will perform analysis of the data

– Does not include claims prior to 5/13/14

ISF Informed Compliance


• Focus on “Significantly Late” ISFs

– Defined by individual port (30 day vs. 2 day voyages)

– Late ISFs impacting CBP’s ability to target cargo and assess risk for cargo holds

– ISFs filed after arrival are always late; exposed to liquidated damages after 3 warnings and cargo holds at any time

• CBP-HQ Review

– Provides another year of review from 5/13/14 to 5/13/15

– CBP-HQ reviews claim details before 5955A is issued

– HQ will conduct analysis of informed compliance records

– Review each violation to ensure it aligns with ISF enforcement strategy

Focus on Severe Violations


ISF and 6-Year Statute

• ISF Liquidated Damage Claims – Subject to 6-year statute per 28 USC § 2415(a).

– Before 7/9/13: CBP has no intention of issuing any LD claims prior to when ISF enforcement began, except in cases of fraud.

– After 7/9/13: CBP has up to 6 years to issue an LD claim for any ISF violations that occur on or after 7/9/13.

New ISF Enforcement Policy Advises Ports – Issue LD claims within 6 months of the ISF violation,

otherwise understood no claim should be forthcoming.

– Does not remove CBP’s right to issue claims up to 6 years per statute, or in the case of criminal activity or fraud.

– Allows sureties to consider return of collateral more timely

– Sureties do not have to consider stacking liability

$50K vs. $300K (6 years x $50K)

http://law.onecle.com/uscode/28/2415.html





Impact of New ISF Policy

• Another year of “Measured” Enforcement – Over 6 years total since 1/26/09

– Claims issued within 6 months eliminates stacking exposure

• Guidance on “Significantly” Late ISFs and 3 Warnings – Eliminates nuisance claims (1-2 days late)

– 1% of ISF transactions vs. estimated 11-20% of ISF transactions

– 10-12 million ISFs x .01 = 100,000 to 120,000 “potential” violations

• First-Time/One-Shot Importers – Start with “clean” slate for known ISF violations

– Makes bonding easier for “ISF Jail” since no exposure to LD claim unless more than 3 violations; there will still be an ISF Cargo Hold

– ISF Submission Type 5 – Late ISF, No Bond on File (soon to be eliminated)


• What about claims requested prior to May 13, 2014?

– CBP HQ will not approve liquidated damages prior 5/13/14

– Except in cases of criminal activity or fraud


• Large/High Volume Importers

– Is policy unfair? Per CBP, “no” since ISF laws have been in force since 1/26/09; provided ample time to meet the laws.

– An enforcement policy based on percentage of volume is also unfair to less experienced importers.

– Larger importers have invested in compliance; don’t typically have ISFs that are considered “significantly late”



• Importer has 5 ISF violations over next year

– All “significantly” late ISFs (based on local port policy)

– Old Policy: $5,000 x 5 = $25,000 / $11,000 / $5,500

– New Policy: $5,000 x 2 = $10,000 / $ 3,500 / $1,750

– Overall Benefit: $15,000 / $ 7,500 / $3,750

# Action Old Policy Mitigate C-TPAT New Policy

1 Email $5,000 $1,000 $ 500 $0

2 Phone Call $5,000 $2,500 $1,250 $0

3 Letter $5,000 $2,500 $1,250 $0

Total $15,000 $6,000 $3,000 $0

4 LD Claim $5,000 $1,000 $ 500 $ 500-$1,000

5 LD Claim $5,000 $2,500 $1,250 $1,250-$2,500


• Liquidated Damages

– How does the new policy impact LD exposures?

– Will ISF violations receive LD claims routinely like Late Entries?


100/Year % # Worst Best C-TPAT New C-TPAT C1 Bond

Violation 3% 1-3 $ 15,000 $ 6,000 $ 3,000 $0 $0 N/A

Violation 5% 5 $ 25,000 $11,000 $ 5,500 $3,500 $1,250 N/A

Violation 10% 10 $ 50,000 $23,500 $11,750 $17,500 $8,750 $50,000

Violation 20% 20 $100,000 $48,500 $24,250 $41,000 $20,500 $50,000

• Worst assumes $5,000 liquidated damage per violation, no mitigation

• Best assumes $1,000 for 1st time violation, $2,500 for all subsequent violations

• C-TPAT assumes 50% reduction of Best

• New is New Policy but doesn’t reflect 50% C-TPAT reduction

Craig, I heard there was a way to BAM down those

claims?



Mitigating Factors • ISF-5 for FROB cargo is not subject to liquidated damages at this time, but would be subject to same

violation types and mitigating factors.

• 6 Mitigating Factors: 1) ISF progress since 1/26/09; 2) Small # of violations to shipments (as %);

3) C-TPAT Tier 2 or 3 status; 4) Demonstrated action to reduce future violations; 5/6) ISF filed late or inaccurate, can mitigate if due to factors outside importer’s control (such as carrier error).

• 4 Aggravating Factors: 1) Non-cooperative; 2) Multiple errors on the ISF;

3) Rising/Deteriorating Error Rate; 4) Smuggling/Fraud.

Violation Type Cause Max. 1st Violation All Other C-TPAT

ISF-10 Filing Late File $5,000 $1,000-$2,000 $2,500 50%

ISF-10 Filing Inaccurate Filing $5,000 $1,000-$2,000 $2,500 50%

ISF-10 Filing Inaccurate Update(s) $5,000 $1,000-$2,000 $2,500 50%

ISF-10 Filing Withdrawal/Deletion $5,000 $1,000-$2,000 $2,500 50%

ISF Mitigation Guidelines



ISF Mitigation Best Practices

• Importer’s ISF Performance Record – How long has importer been compliant with ISF?

– Emphasize importer’s compliance record (especially 3 warnings)

• Timeliness/Accuracy (95% timely/98% accurate)

• Include ISF Progress Report (from Filer or ACE portal)

• Overall cooperation

• C-TPAT Status – Request 50% mitigation based on C-TPAT status of importer

and/or ISF Filer.

• Describe Nature of Error or Violation – If clerical in nature, describe why it occurred?

– Was carrier at fault? Provide specific details.

– Was it a one-time or repeat violation? Explain.

– Outline how future violations will be avoided.

ISF Mitigation Best Practices


• Maintain Records for Mitigating Factors in Petitions

– CSMS# 14-000260 - Disruption to ISF Bill Matches on 4/17/14

– CSMS# 14-000219 - Delays in ISF Processing on 4/17/14

– CSMS# 14-000129 - ISF Rejections on 3/20/14

• Other Mitigating Factors

– Carrier changes the B/L number causing a mismatch

– ISF was filed timely but B/L mismatch made it appear late

– One of the 3 ISF warnings was made in error based on the above or another reason, petition 4th claim for relief

http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTQwNTAyLjMxODM3NDAxJm1lc3NhZ2VpZD1NREItUFJELUJVTC0yMDE0MDUwMi4zMTgzNzQwMSZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTE3MDAzMTcwJmVtYWlsaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZ1c2VyaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZmbD0mZXh0cmE9TXVsdGl2YXJpYXRlSWQ9JiYm&&&100&&&http://apps.cbp.gov/csms/csms.asp?srch_argv=14-000260&srchtype=all&opt=1






http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTQwNDE3LjMxNDAxNDAxJm1lc3NhZ2VpZD1NREItUFJELUJVTC0yMDE0MDQxNy4zMTQwMTQwMSZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTE2OTgxODMzJmVtYWlsaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZ1c2VyaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZmbD0mZXh0cmE9TXVsdGl2YXJpYXRlSWQ9JiYm&&&100&&&http://apps.cbp.gov/csms/csms.asp?srch_argv=14-000219&srchtype=all&opt=1






http://links.govdelivery.com/track?type=click&enid=ZWFzPTEmbWFpbGluZ2lkPTIwMTQwMzAzLjI5NTg3NTYxJm1lc3NhZ2VpZD1NREItUFJELUJVTC0yMDE0MDMwMy4yOTU4NzU2MSZkYXRhYmFzZWlkPTEwMDEmc2VyaWFsPTE2OTExODMzJmVtYWlsaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZ1c2VyaWQ9bGdlbHNvbWlub0BhdmFsb25yaXNrLmNvbSZmbD0mZXh0cmE9TXVsdGl2YXJpYXRlSWQ9JiYm&&&100&&&http://apps.cbp.gov/csms/csms.asp?srch_argv=14-000129&srchtype=all&opt=1







ACE ISF Portal

• All ACE accounts access ISF reports in same manner – Go to References Tab

– Select Task “Links” from Menu Panel on the left

– Button to “Launch ISF” will appear

• “Launch ISF” will open new window – Sign up for reports in Reports Menu

– Reports will then appear in Reports Tab (check daily) CSMS #11-000155 effective 7/13/11 http://apps.cbp.gov/csms/viewmssg.asp?Recid=18395&page=9&srch_argv=11-000155&srchtype=&btype=abi&sortby=&sby= http://apps.cbp.gov/csms/docs/18395_749938721/Final_Information_Notice_ISF_Portal.pdf

http://apps.cbp.gov/csms/viewmssg.asp?Recid=18395&page=9&srch_argv=11-000155&srchtype=&btype=abi&sortby=&sby=



http://apps.cbp.gov/csms/viewmssg.asp?Recid=18395&page=9&srch_argv=11-000155&srchtype=&btype=abi&sortby=&sby



http://apps.cbp.gov/csms/docs/18395_749938721/Final_Information_Notice_ISF_Portal.pdf


ISF Progress Reports

• Per CBP, only an estimate of ISF compliance

• C-TPAT tier 2 and 3 receive line item detail


ISF Progress Reports

• Measures ISF Timeliness based on Vessel Departure Messages (VDMs) received by CBP minus 24 hours per local time (based on mother vessel)

• “ISFs Not Measured for Timeliness” occur when no VDM received by CBP.

• Per CBP, these are not late ISFs and do not negatively affect an importer’s compliance rate.


ISF Reports in ACE

• CSMS #12-000031 dated 2/1/12

• Late ISF Report for ISF Filers and Importers

• By Filer by Importer Report — Available in PDF or Excel

— Allows for line item detail and compliance

http://apps.cbp.gov/csms/viewmssg.asp?Recid=18599&page=&srch_argv=12-000031&srchtype=all&btype=&sortby=&sby=




ISF Surety Data in ACE

• Surety receives snapshot of ISF activity (monthly) • Since 3/10/14, surety receiving vessel departure message/date

• ISF Transaction Count based on Avalon Data – Based on Avalon data (ACE portal July 2011, VDMs March 2014

– Format/Filer: 80% ABI; 20% AMS

– Status: 99.89% Accepted; .11% Rejected

– Action Reason: 98.28% CT vs. Flexible Filing (FR, FT, FX)

– Bond Type: 98.4% CBs; 1.6% STBs

– ISFs Late: 16% based on Avalon’s data (not fully populated yet); 11% with more data (not complete data)

Bond

Holder

ISF

Imp #

ISF

Imp

Name

Filer#

Name VDM

ISF

Sent

Date

Formt Action Status Action

Reason

Shipment

Type

ISF

Status

ISF

# SCAC

Bill

#

Bill

Type

Bond

Type

Bond

Code Error

Bond

#

Name

09/10/13

01:38:10

PM

09/06/13

01:38:24

PM ABI Add Active CT 01 Accepted BM 9 16 STB#

IR#

09/08/13

2:10:28

PM

09/13/13

04:19:38

PM AMS Add Active CT 01 Accepted OB 8 1 CTB#

Contact and Links to Information

Avalon Risk Management

ISF/eBond Questions Group email: [email protected], Hot Line: 847-700-8473

ISF Claim Questions Zuleika Medina: [email protected], Surety Claims Manager

eBond Questions: [email protected]; eBond http://www.avalonrisk.com/ebond.html

ISF and ACAS Information http://www.avalonrisk.com/isf.html;

CBP

Craig Clark [email protected] or [email protected]

CBP ISF Page http://www.cbp.gov/border-security/ports-entry/cargo-security/importer-security-filing-102

CBP ISF FAQs http://www.cbp.gov/sites/default/files/documents/10_2faq_0.pdf http://www.cbp.gov/sites/default/files/documents/Addendum to FAQ_Updated ISF Enforcement Strategy.pdf

ISF Mitigation Guidelines http://www.avalonrisk.com/questnewsletter/news/mitigation.pdf

Bond/eBond http://www.cbp.gov/trade/trade-community/outreach-programs/revenue http://www.cbp.gov/sites/default/files/documents/bond_form_7.pdf http://www.cbp.gov/trade/ace/catair (eBond/CATAIR)








http://www.avalonrisk.com/isf.html

http://www.avalonrisk.com/isf.html

























http://www.cbp.gov/sites/default/files/documents/bond_form_7.pdf


Questions?


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Documents

Joint Presentation to FTA, LACBFFA and WIT-LA Wednesday ... FTA eBond and ISF...• CBP organized and hosted e-STB and eBond working group meetings: • December 2, 2013 focus on e-STB