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Census’ new FTR tightens enforcement, increases penalties Consider an action plan for compliance

The Census Bureau (Census) published its long-awaited final rule on the new Foreign Trade Regulations (FTR), which eliminates paper documentation and requires exporters to use the Automated Export System (AES) or AESDirect. To view the final rule in its entirety, click here. In addition to clarifying multiple FTR, the rule also significantly increases penalties with greater enforcement from the Department of Commerce (DOC) and Department of Homeland Security (DHS). While the rule’s effective date is set at July 2, it will not be formally implemented until September 30.

 

Census and the DHS resolved a three-year dispute to issue the final rule, regarding sharing confidential export data and whether or not to allow companies to file export documents up to 10 days after a shipment has left the country, rather than before departure. The rulemaking attempts to make export compliance easier by including sections on definitions, voluntary self-disclosure, proof-of-filing citations and cross-referencing pre-existing and new requirements. Representatives at Census say the rules will also be available on CD.

 

Key provisions of the FTR include: All export data must be filed electronically through AES. Paper Shipper Export Declarations (SEDs) will no longer be accepted. Census indicates only 25,000 to 30,000 paper documents are filed each month out of 1.2 million SEDs processed monthly. Civil penalties are significantly increased from $1,000 to $10,000 per violation. Criminal penalties are also increased to a maximum of $10,000 per violation and/or 10 years imprisonment. Self-disclosures will be shared with other exporting agencies, but Census has discretion on mitigating factors in penalty cases.

 

In 2006, Census started auditing exporters not meeting AES obligations. While penalties were not previously enforced, implementation of the FTR in September will cause an increase in penalty enforcement. Because of the greater sharing of information among U.S. government agencies, exporters will need to file multiple voluntary disclosures with various agencies if violations do occur. Increased penalties can jeopardize your business and an action plan must be considered to ensure compliance with new regulations.

 

The simplest mistake can lead to a violation, which could result in serious consequences.

 

Avalon Risk Management that supplied the details for this article is a vendor for the Gateway Logistics Group, and is an expert on the AES requirements that Exporters face in 2008. For this reason we believed it would be good to pass the above information on to our staff and clients. The Gateway Logistics Group, Inc. is a Houston Freight Forwarder with a proven track record in submitting Export Declerations on our Clients behalf via the Automated Export System (AES). We also have access to AES Direct as a secondary, back up means of ensuring timely completion of export decreleration  requirements.  As an exporter, we hope you will consider the Gateway Logistics Group as an action plan to successfully fulfill Census requirements now and after the Paper SED's go extinct on Sept. 30th, 2008.