ISF Enforcement: Penalties, Filing Errors, and Mitigation

While enforcement of ISF (Importer Security Filing) violations began in May 2015, the enforcement environment has stiffened markedly in the last year. ISF requires importers and carriers to provide a set of information for any shipments being imported into the United States within at least 24 hours before loading their shipments or else they may face major fines and cargo holds. Due to an increasing number of violations, Customs and Border Protection (CBP) has upped the ante in terms of enforcement strategy:

  • CBP Ports will no longer be obligated to issue “three strikes”, as mentioned in our Shap Flashes and Shap Talk updates.
  • Liquidated damage claims for ISF violations will no longer be sent to CBP for evaluation; they will now be initiated at ports.
  • Ports are now directed to issue liquidated damages within 90 days of learning of the violation.

According to Patrick Burnson, Executive Editor of Logistics Management Magazine OMIT DATE, many affected by ISF had the attitude “CBP does not care so why should we?” This is a new era: there will be consequences for violating ISF. CBP does care.

Here’s where the rubber hits the road:

Penalties and Costs

Customs can assess damages up to a maximum of $10,000 per shipment for violations such as failure to submit ISF timely, accurately, or completely. This includes:

  • Failure to file ISF ($5,000 per shipment)
  • Late filing of ISF ($5,000 per shipment)
  • Incomplete filing of ISF ($5,000 per shipment)
  • Failure to withdraw ISF ($5,000 per shipment)
  • Failure to ensure ISF filing matches Bill of Lading ($5,000 per shipment)

If that were not bad enough, you may also face cargo holds until CBP receives the required information and has had the opportunity to review and examine the documentation.

Top ISF Filing Errors

The top ISF issues include missing or incorrect bill of lading numbers, bonds, and untimely filing. Understanding these issues can help prevent penalties and correct common mistakes:

  • Ocean carriers are often not providing timely bill numbers. They are also responsible for identifying the lowest AMS, house or regular, bill of lading number. Shippers must provide the ocean carrier’s “regular bill” if dealing with a non-automated FF or non-automated NVOCC. It is also important to know that the bill of lading must match the ISF.
  • The ISF Importer is required to post a bond to secure their ISF. Appendix D bonds are routinely accepted for ISF filings. However, sufficiency questions are still being addressed.
  • In order to have a timely ISF, shippers must have it filed no later than 24 hours before vessel departure. This is modeled after the 24-Hour Manifest Rule enforcement standard. CBP uses the first bill of lading file date as a “proxy indicator” of ISF timeliness since the bill of lading must also be filed at least 24 hours prior to loading vessels. CBP acknowledges that many bills of lading are actually filed several days before loading the vessel. Therefore, some of the “untimely” ISFs that show up on the ISF Progress Reports may actually be timely. CBP is now using the vessel departure date minus 24 hours to better assess ISF timeliness.

Mitigating Penalties

The good news is that first violations of ISF may be mitigated to $1,000-$2,000 depending on the mitigating circumstances and other factors of the violation.

One mitigating circumstance is if evidence of progress with timely ISF processing can be shown. It is also helpful if you have a small number of violations in comparison to the total number ISF declarations you have filed. Mitigation of liquidated damages can also occur if inaccurate filings are due to events beyond the importer’s control, such as receiving incorrect information from another person in the supply chain.

In addition, C-TPAT members will receive up to 50% penalty mitigation for ISF penalties.

CBP will not grant any relief if it is determined that law enforcement goals were compromised by the violation. In addition, liquidation damages will not be assessed for the failure to file an ISF if no bond is in place.

Want to learn more? Visit our resource center to learn everything you need to know about Import Security Filing (ISF).

 

-- Uncle Larry
Chief Logistics Officer