Customhouse Brokers in International Shipping

A Custom house Broker in international shipping is a person who is licensed under Part 111 CR to transact Customs business on behalf of others.

General Requirements to become a Customs Broker in international shipping:
For more detailed information http://www.customs.gov/xp/cgov/import/broker_management/brokers.xml

1. Must pass the exam with a 75% or greater passing score and apply for the Customs Broker's license within 3 years after passing the exam.
   
   The exam is typically given at CBP service ports ( ports ) on the first Monday in April and the first Monday in October. If that Monday is a religious holiday, the examination will be given the following Tuesday. The appropriate CBP port director must receive the examination application and a $200 fee at least 30 days before the examination.
2. Must be at least 21 years old.
3. Must be a U.S. Citizen.
4. Must have a good moral character.
   CBP and FBI will check out your background for Felony convictions (1); Credit scores (2); You cannot be a Government employee, even a member of the National Guard, etc. (3); involved in drug use (4), etc. It may take from 8 to 12 months.
   
   If they do not feel comfortable issuing the license, they may refuse to issue it to you. An applicant may file with the Commissioner a request for review of the facts in writing or by personal appearance within 60 days from the date of denial. If the Commissioner affirms the decision, the applicant may appeal to the Secretary of the Treasury within 60 days of the Commissioner's affirmation of rejection.
5. You must submit fingerprints.

Application for a broker's license involved in international shipping must be submitted on CF 3124 and shall be made under oath. In the case of an individual, the application must be in the hands of the Port Director at least 30 days before the scheduled examination. The application must be accompanied by a check made out to the United States Customs Service for $200. Upon passing the examination, an additional $200 will be required for a total fee of $400.

The Customs Broker license in international shipping is valid NATIONWIDE and FOR LIFE without re-testing. A Permit to Operate is issued in each district you operate in. You automatically get a District Permit in the district where you took the license exam. However, some things have to be done to keep the license active.

Three types of organizations that Customs will permit: The term "person" as used
above may denote individuals, partnerships, associations, or corporations.

1. Sole Proprietorship.

You operate under your name (1), you have a Permit to Operate (2), and you have proof to use the name in your state (3), i.e., you have registered the business.

2. Partnership.

The same as above, but at least one partner must be a licensed CB and a permit holder.

3. Corporation.

• In the corporation, ONE officer must be licensed and a permit holder, no matter how many licenses you have in the corporation.
• A corporate license will be suspended if there is NO LICENSED CORPORATE OFFICER after 120 days.
  After 180 days, the Permit to Operate will be suspended.
• The corporation article MUST state that the corporation is in the customs brokerage business. For example, if an FF got the CB license, it must be changed in the article of the corporation.

If a corporation has multiple offices within one district (Let's say in the District of New York, it has offices in the port of New York and JFK Airport), then:

• It uses the original Permit to Operate and DOES NOT require a license in each office.
• However, the licensed CB must provide RESPONSIBLE SUPERVISION, i.e., Frequent visits (1), Having HTS on file in each office (2), and being available for each office to answer questions related to CB business (3).
• Recordskeeping must be done separately in each office.

RECORDS and ACCOUNTING KEEPING.
U.S. Customs will visit CB locations to review the Recodes (1) and Accounting (2) keeping. Customs must be assured that they can trace it back to the source if they want to check out something for an importer or shipper.

CB MUST KEEP IN RECORDS:

Customs form 3079 (Record of Transaction of Licensed Customhouse Broker) must be kept in accordance with instructions on the form unless the Port Director has granted an exemption. This authority is given when the information required on CF 3079 is disclosed to other Customhouse Brokers.

1. Entries and all supplied documents must be kept for 5 (five) years: from the DATE OF ENTRY for CONSUMPTION entries (1) and the LAST WITHDRAWAL for WAREHOUSE entries.

2. Powers of Attorney must be kept ORIGINALS ONLY: at ALL TIME for active PA (1) or for 5 (five) years from the date of revocation if CB's client had revoked it.

3. Confidentiality, NO ONE. No entity can look at the client records except the CLIENT HIMSELF (1), CUSTOMS (2), or UNDER A COURT ORDER (3). I.e., ANY government agency MUST HAVE A COURT ORDER to review your client records.

FINANCIAL MANAGEMENT: 19 CFR 111.29

1. If it is the money FROM CUSTOMS that CB must return to his client, it must be returned WITHIN 60 DAYS.
Example: An entry had been liquidated, and Customs found that duty had been overpaid and issued a check with a refund.

2. If it is the money FROM THE CLIENT TO CUSTOMS, CB must pay it ON or BEFORE THE DUE DATE.
For example, CB got a check from the client containing CB's fee and customs duty. Then it must be paid ON or BEFORE THE DUE DATE.

3. If it is the money FROM THE CLIENT TO CUSTOMS paid to CB AFTER THE DUE DATE, then it must be paid WITHIN 5 (FIVE) WORKING DAYS to the Customs.
Example: CB filed an entry WITHOUT DUTY ATTACHED within 10 working days, but the client has forgotten to pay duty. (Probably a penalty will be involved as well).

4. CB must inform his clients AT LEAST ONCE A YEAR that THEY CAN PAY TO CUSTOMS DIRECTLY (usually, it is stated in CB invoices). To avoid bounced checks, having your clients pay Customs directly is a good practice. In this case, if a check bounces, then Customs goes to the client but not you.

EMPLOYMENT IN A CUSTOMS BROKER COMPANY:

CB must always file with Customs LIST OF EMPLOYEES (19 CFR 111.28) with name (1), address (2), SSN (3), and 3 (three) years of work history.

• CB must do that for all new employees WITHIN 10 DAYS AFTER 30 DAYS OF EMPLOYMENT. (The first 30 days of Customs do count, such as the trial period of employees, and do not require the filing.)
• When employment is tormented, CB must provide the info to Customs within 30 DAYS AFTER THE TERMINATION. (If it is terminated within 30 days of the trial period, it does not apply).

Requirements for CB employees:

1. They DO NOT have to be U.S. Citizens but must be U.S. Residents and have work authorization in the USA.
2. IMPORTANT: If an employee signs documents for CUSTOMS BROKER in international shipping, then HE MUST HAVE A POWER OF ATTORNEY FROM THE CUSTOMS BROKER.

IF CB CHANGED THE NAME or ADDRESS OF THE ORGANIZATION, THEN CUSTOMS (PORT DIRECTOR) or headquarters MUST BE NOTIFIED.

CUSTOMS BROKER'S ETHICS:

Ethics is the business common sense. It would be best if you dealt with DILIGENCE.

CB has both obligations:

1. To the client, that works (i.e., HTS, forms, etc.) had been done correctly, and
2. To U.S. Customs. Ensure that the revenue of the U.S. Government is protected.

SOME TOPICS OF THE ETHICS:

• CB has the ETHICAL obligation to determine facts given to Customs.
  Example: A shipper declares that the value of an obviously costly machine is $1.
• CB has an ETHICAL obligation to report errors and omissions from clients. Otherwise, Customs will consider that you are involved in these errors and omissions.
• CB cannot import the same commodity that your client imports. Otherwise, you become a competitor to your client.
• CB cannot collect money from clients, such as % from bills unless it is the actual research. I.e., CB can be paid for his time and effort in studying items.
• CB must display his license in the office at all times.

PENALTY:

The maximum penalty to CB is $30,000. After that, Customs took CB's license and put CB out of business.

If the license had been revoked, NO ONE CAN HIRE YOU FOR THE JOB EVEN AS EMPLOYEE FOR 5 YEARS!
After 5 years, you may apply to Customs to get approval to work AS AN EMPLOYEE for somebody else. NOT FOR YOURSELF. CFR 111.79.

STATUS REPORT:

CB must file the Status Report to Customs EVERY 3 (THREE) YEARS (starting 1979. No matter when the license was issued). It must be filed before February 1st of each 3 years (If filed during February, it is still counted as filed timely).

Failure to file this report will result in license cancellation by "operation of law."

CANCELLATION OF THE LICENSE:

1. Without prejudice. VOLUNTARILY. CB got a Government job, etc.
The Commissioner may cancel a broker's license without prejudice upon written application if it is determined that the request was not made to avoid suspension or revocation of the license. Upon request by the Broker, the cancellation may be made with prejudice, which is, in effect, the same as if the license had been revoked for cause by the Secretary.

2. With PREJUDICE. Customs took a CB license.

3. Operational low. I.e., partnerships loose their licensed CB, CB failed his Status Report, etc.

THE CUSTOMS BROKER CAN APPEAL TO THE SECRETARY AND, IF DENIED TO THE CIT, WITHIN 180 DAYS OF DENIAL.

MISCELLANIES:

• CB CANNOT employ disreputable people, but he CAN REPRESENT disreputable people.
• CB CANNOT use his bond for those who lost their Immediate Delivery Privileges.
• IF YOU DO CUSTOMS BROKERAGE BUSINESS WITHOUT THE LICENSE, YOU WILL BE FINED $10,000 PER ENTRY.
• Customs considers an active client who does TWO ENTRIES with CB WITHIN ONE YEAR (last 12 months).
• CB CAN NOT use the client's DUTY CHECK to offset the money the client owes him. I.e., DUTY CHECK must do to Customs.
• A PERMIT TO OPERATE IS VALID FOR 180 DAYS, even if there is NO ACTIVITY under that permit.
• Permits to Operate users FEE:
  a. If CB had been licensed in the district, he would have got a FREE Permit and a $125 user fee.
  b. In any additional districts, CB must pay a $100 one-time permit fee plus a $100 user fee.