Monday, October 19, 2009

Full Importer Security Filing Compliance Deadline Fast Approaching!

In only three months the Importer Security Filing, also known as ISF or 10+2, will go into full effect. Many importers are still unaware of the consequences of non-compliance, or have simply been postponing implementation. Now, however, it is really time for action.

Basis of ISF

The Importer Security Filing is based on the USA’s SAFE Port Act of 2006. U.S. Customs and Border Protection (CBP) published its ruling on the Importer Security Filing on November 25, 2008. Similar to the 24-Hour Advance Vessel Manifest (AMS) rule, C-TPAT, Container Security Initiative, and other security measures, ISF is designed to improve national and international security.

Since January 26, 2009, all U.S. importers (definition also amended by CBP for this ruling) have been required to electronically submit 10 data elements, plus bill of lading numbers, 24 hours prior to the loading of containers and break bulk cargo onto ocean vessels at the foreign port. The ocean carrier must also file 2 data elements - the vessel stow plan and the container status messages. This is the “+2” of 10+2. The key or connector to the ISF, the AMS, and the customs entry is the house bill. The 24-hour advance “timing” is based on the AMS filing and container status message data.

This ISF information must be filed for all ocean shipments entering, or even just transiting the USA, including shipments going into Free Trade Zones (FTZ). For In-Transit or FTZ shipments only 5 of the 10 data elements must be filed. Please contact me if you are interested in a comparison chart of the individual breakdown of data elements for these shipments.

Filing the ISF

U.S. importers may choose to file this information themselves, or contract with an agent to do this for them. However, only those entities certified for transmitting electronically to U.S. Customs via AMS (normally forwarders and NVOCCs) or ABI (customs brokers) interfaces may submit the actual ISF filing. Obviously most ISF filings will be submitted via a “Filing Agent”, much the same as most customs entries are filed by a customs broker. Either way, legal culpability for filing in an accurate and timely manner remains entirely with the importer.

The best ISF filing programs support web-based, user-level access, allowing both electronic download or manual input of data by the shipper (or its supplier / vendor), and allowing the importer or customs broker to verify / edit data prior to filing. This is a very important aspect as U.S. Customs will later compare the ISF filing with the actual customs entry to verify accuracy of the importer’s ISF data.

Acquiring the ISF Data

Much of the required ISF information has historically not been available until later in the time-line of events, as the export and commercial documents have typically been issued well after the shipment was loaded and placed in transit. U.S. importers must work with and educate their foreign-based suppliers regarding the new information requirements, and develop a method to submit or provide this information to their Filing Agent in a timely fashion. This “need” is critical because fines of $5,000 per incorrect or late filing can be issued.

Because of the change in information and document flow ISF compliance requires, U.S. Customs has allowed a period of “flexible reporting” and “flexible enforcement” ending January 26, 2010. This is when fines, penalties, and “Do Not Load” messages will begin.

I will address this “flexible” period as well as ISF fines & penalties, and their potential mitigating factors in my next post.

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