In an August 14, 2019 Notice of Proposed Rule Making, U.S. Customs and Border Protection (“CBP”) announced its intent to increase requirements on licensed customs brokers to verify the identity of the importers with whom they transact.  CBP reports that each year, approximately 350,000 importers actively engage with CBP through almost 2,100 licensed customs brokers.  Ensuring that each of these importers is a legitimate entity and not, for instance, a shell corporation used to evade customs enforcement or support enemies of the U.S., is a constant challenge for US authorities. Currently, for an importer to authorize a customs broker to act on its behalf through a Power of Attorney (“POA”), the importer is required only to disclose basic name and address information. CBP’s proposed rule changes would dramatically increase the required disclosures and the obligations of customs brokers to verify the information provided to them. Under the proposed revised rules, a broker would be required to obtain the following information at the time they executed a POA with an importer:

(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), or importer of record (IOR) number;

(9) The client’s publicly available business identification number (e.g., Data Universal Numbering System (DUNS) number, etc.);

(10) A recent credit report;

(11) A copy of the client’s business registration and license with state authorities; and

(12) The grantor’s authorization to execute power of attorney on behalf of client.

Further, CBP recommends that each of these data points be verified in-person, such as a visit to the importer’s physical location and inspection of their photo identification. In addition, the information would need to be updated and re-verified on a periodic basis.  Certain of these requirements and, in particular the recommendation for in-person verification, may prove impractical given the fast pace of international trade.  Nevertheless, customs brokers tend to agree that “knowing your customer” is essential to border security and already seek much of this verifying information from their clients.

Public comments on the proposed rule changes are open until October 15, 2019.  Check back for an updates on any changes to the proposed rules, their effective date, and information on ensuring that your clients, brokers, and supply chain are in compliance.

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