New ISF Enforcement Strategy Implemented by CBP

U.S. Customs and Border Protection (CBP) has announced that they are taking another step in its measured ISF enforcement strategy.  There are still many shipment arriving without the Importer Security Filing (ISF) matched to the manifest for ocean shipments arriving at United States ports of entry. CBP needs the advance data to properly assess the security risks of the arriving cargo. While some penalty cases were issued when CBP began its first measured enforcement up until the past May 13, CBP has not been issuing penalty cases for liquidated damages for ISF violations for some time. They have been holding cargo for the missing data in many ports.
Under the new measured enforcement that went into effect on May 13, 2014, CBP at the local Ports can begin actions for those shipments that do not have the ISF matched to the bill of lading on a manifest before the vessel arrives in most Ports. While the law clearly calls for the ISF to be filed before the vessel is loaded, CBP will, for now, require the data be received and matched generally 48 hours before the vessel arrives for ISF violation review.  There will be different time frames for voyages that have a less than 48 hours time frames from the time of departure to the actual arrival. The Ports with those challenges will set reasonable time frames for the data to be received to do proper security review. 
The new ISF enforcement strategy will provide for a standard approach to conduct analysis into non-complaint ISF filings, while still allowing for local Port discretion. Under the new measured enforcement, CBP at the local Ports can take actions that can include holding freight as well as issuing liquidated damage claims for those shipments that are significantly late or have no ISF matched to the bill of lading. Ports can still decide to hold cargo rather than issue liquidated damages. Others may use a combination of holds and actions.
The new ISF enforcement program will require CBP to do outreach with those that are failing to properly file their ISF’s before a penalty is issued. CBP has initiated a 3-strikes rule for all Ports.   When a shipment arrives without the required ISF, CBP may reach out to the importers to find out what the problem was to work with the importer to correct the problem for future shipments. In its outreach, CBP may determine that treatment as a violation is in order and will issue a “First Strike” record for that importer.  An importer is allowed 3 strikes before a liquidated damages case can be issued.  
CBP has begun the new ISF enforcement regime by focusing on the most severe violations, such as those ISF’s that are significantly late or not filed at all. CBP is giving the Ports great leeway in their review, but intends that significantly late filings be considered to be those that, with the failure of an ISF filing, had negatively impacted CBP’s ability to assess risk in imported cargo.
The LACBFFA sent out a note on May 19 that, based on the guidance received, there will be no changes in the ISF enforcement process now in effect at the Ports of Los Angeles and Long Beach. However CBP in Los Angeles may also send notices that may lead to liquidated damage cases. The LACBFFA, the Foreign Trade Assoc, and Women in Trade-LA, are sponsoring a seminar on June 11 that will include a more complete update on the new ISF Enforcement Regime.

FAQ:  Updated Importer Security Filing (ISF) Enforcement Strategy

What are the key points behind the new strategy?

  • CBP has implemented a revised enforcement strategy which provides for local discretion at the port level based on infrastructure and staffing resources (i.e., holding freight vs. issuing liquidated damage claims).
  • The strategy further provides for a standardized approach which will permit CBP HQ to conduct analysis into non-compliant ISF filings with the intent to conduct focused outreach.
  • The tenets of the strategy include at least three warnings (informed compliance outreach) to each violating importer before CBP will pursue a liquidated damage claim against that importer’s bond.
    • The informed compliance outreach may be by e-mail, telephone, or letter.
    • This approach allows CBP to have greater visibility into who are the repeat violators, and it exposes any geographic areas that may require more focused ISF outreach.
    • The 12-month HQ review period that began on July 9, 2013 has also been changed as part of the revised enforcement strategy. The current enforcement review will conclude on May 13, 2015.  HQ will be conducting analysis of the informed compliance records, effectively reviewing each record of violation to ensure that the violation aligns with the intent of the enforcement strategy.
    • Liquidated damages claims should be expected within 6 months of the violation; however, this policy does not preclude CBP’s six-year statute of limitations for liquidated damages claims.
    • Ports have been advised to focus enforcement actions on the most severe violations (i.e., significantly late, or missing ISFs).
      • “Significantly late” will be defined by the individual ports, and is intended to only apply to those shipments where the ISF filing (or lack thereof) negatively impacted CBP’s ability to effectively assess risk and hold cargo.
      • ISF filings after arrival are always late and exposed to both liquidated damages claims and ISF holds.

What is affected by the new strategy?

  • The initiation of liquidated damages claims for ISF violations.
  • The port directors retain the discretion to enforce ISF by using the cargo holds that were introduced on July 9, 2013.

How will CBP track the violations?

  • CBP will use an internal database to keep track of the violations.  The database is visible nationwide, so officers on the west coast will be able to see actions taken by officers on the east coast against specific importers.
  • CBP HQ will perform analysis of the data with the intent of identifying locations or importers where enhanced compliance outreach is required.

Is the enforcement only for ISF-10?

  • Yes.  Enforcement actions (including liquidated damages) for ISF-5 violations are not currently enforced, pending changes to the regulation.  

Isn’t this policy unfair to high-volume importers?

  • No.  The law has been in place since January 26, 2009, and CBP believes ample time has been provided for adjustment to the requirements of the law.  Conversely, an enforcement approach that considered percentage based on volume is certainly unfair to less experienced importers.

What is CBP going to do about the liquidated damages claims that were requested prior to May 13, 2014?

  • Unless in cases of fraud or criminal activity, CBP HQ will not be approving liquidated damages claims prior to May 13, 2014.