Broker Can't Use Offshore, Unlicensed Company to Key in Entry Data, CBP Says

Heizwerthy Customs and Freight Solutions had asked CBP whether it could hire a “foreign offshore” unlicensed company to “review shipment documents, such as a bill of lading and commercial invoice, and extrapolate certain data elements necessary to file entry for the imported merchandise to key into the ABI software based on instructions provided by Heizwerthy,” CBP said. Heizwerthy would then “audit the data” and “make necessary amendments,” and itself transmit the entry to CBP.

The customs laws say customs business includes “preparation of documents or forms in any format and the electronic transmission of documents, invoices, bills, or parts thereof intended to be filed with” CBP. Customs business may only be conducted by an entity with a customs broker license.

In the ruling, dated Dec. 19, CBP said: “Identifying entry-related data and keying it into an ABI system for [entry] falls squarely within the scope of preparing parts of an entry intended to be filed with CBP. Consequently, the Unlicensed Company would impermissibly be performing ‘customs business.’”

The agency pointed to a ruling it issued in 2009 that found a service bureau couldn’t hire an unlicensed contractor to use optical character recognition technology to scan shipping documents and use the data obtained to generate entry documents (though the contractor wouldn't transmit the entry). CBP said that, similarly to the unlicensed contractor in the 2009 ruling, the employees of the unlicensed company hired by Heizwerthy would “review shipment documents, albeit manually, to determine the relevant information to generate an electronic file for eventual transmission to CBP.”

Heizwerthy said the unlicensed company would sign a confidentiality agreement and would only be granted a “limited access role” in the customs broker’s ABI, “which would prevent the Unlicensed Company from transmitting entry data to CBP directly, generating customs documents, or viewing importer files.”

But parties eligible to access the ABI for entry and entry summary purposes can only be customs brokers, importers and ABI service bureaus, CBP said. “Since the Unlicensed Company is none of these parties, they are by regulation not eligible to access ABI for entry and entry summary purposes,” the agency said.

Also, to be granted permission to access ABI, “an applicant must commit to ‘develop, maintain and adhere to the performance requirements and operational standard of the ABI system in order to ensure the validity, integrity, and confidentiality of the data transmitted,’ and be specifically approved by CBP to access ABI.” The unlicensed company identified by Heizwerthy has not been approved by CBP, and isn’t authorized to access the ABI using the custom broker’s account, CBP said.

And allowing a third party to use Heizwerthy’s account, which contains client records and data, would breach the broker’s privacy obligations under CBP’s regulations to not disclose client records “to any persons other than those clients,” unless Heizwerthy’s clients have provided written authorization.

Lastly, the fact that the unlicensed company would use foreign employees could also bar Heizwerthy from working with the company, CBP said. Since Dec. 19, 2022, when CBP’s Part 111 rewrite took effect, all customs business must be conducted within the U.S. customs territory, CBP said. That includes only the 50 states, D.C. and Puerto Rico, CBP said. ”We caution that Heizwerthy must abide by 19 C.F.R. § 111.3(a) to ensure customs business is conducted within the customs territory of the United States whenever engaging with foreign entities,” it said.