Enforcement on the Rise

Enforcement on the Rise

If our federal law enforcement colleagues are to be believed, those who trade in counterfeit goods and smuggled currency are not only acting illegally, but also are likely to be supporting terrorists and other nefarious guys.

With that idea in mind, it was not surprising when Homeland Security Secretary Janet Napolitano went to Brussels early this month to meet with representatives of the World Customs Organization, and the big news was about the “largest multilateral operation in history targeting cash smugglers.”

Some 80 countries participated in Operation ATLAS (Assess, Target, Link, Analyze and Share), which resulted in $3.5 million in cash being seized, plus the identification of $24 million in undeclared currency, at ports worldwide. This effort took place Oct. 26-30. U.S. Immigration and Customs Enforcement, Customs and Border Protection, Interpol and Europol were all involved and worked closely with the WCO using CENcomm, a “secure communication tool” developed by the WCO.

“Real-time information sharing and coordination of cash declaration data was used to disrupt and dismantle criminal organizations that smuggle illicit cash around the world” and used a variety of methods to “detect cash carried in baggage, on travelers and in shipments aboard commercial flights,” the DHS said in a press release.

What made the announcement noteworthy was Napolitano was in Europe and the Middle East to discuss information sharing, privacy protection, cyber security, international response to the H1N1 pandemic and coordination to combat transnational criminal activity and the global threat of terrorism. Nothing like a major bust to start things off!

During this period, despite the wishful thinking of many, Customs confirmed there will be penalties issued for violations related to the Importer Security Filing, or 10+2, program, but all proposed penalty notices will first be reviewed at headquarters by program experts. The enforced compliance date for this program remains Jan. 26, at which time importers become liable for $5,000 penalties for any security filing that is late, inaccurate or has not been properly withdrawn.

While having common sense apply to any claims is welcome and not unexpected news, the problem of getting the bill of lading number remains significant. Many carriers and cargo consolidators continue to insist they cannot issue the bill of lading number until after loading.

Of course, the consolidators’ position on this has always been ludicrous because they issue their own bills of lading and can assign a number at any time. And many of the vessel operators arguing this point are the same carriers able to transmit their manifest data 24 hours prior to loading, so how credible can their position be if they know the bill of lading number in time to meet the 24-hour rule?

It also is worth asking why so many carriers have been able to make the booking number their bill of lading number while a handful remain dumbfounded.

Because enforcement covers imports and exports, it also is worth noting the plight of Laura Wang-Woodford, director for Monarch Aviation, a Singapore company that imported and exported military and commercial aircraft components. She received a 46-month prison sentence this month and was ordered to forfeit $500,000 to the U.S. Treasury Department for conspiring to violate the U.S. trade embargo on Iran by exporting controlled aircraft parts without a license.

The indictment alleged that between January 1998 and December 2007, Monarch and Jungda, another company Wang-Woodford operated, imported aircraft parts to Singapore and Malaysia and then re-exported those parts to companies in Tehran, Iran, without first obtaining the required licenses.

Because the subject of this column is about increased enforcement, it is worth mentioning the creativity of the U.S. government in claiming a conspiracy occurred because the two companies were listed as the ultimate consignees of the various shipments on the U.S. export documents, when clearly they were not. There seems little question the parts were for military aircraft; they fit Chinook military helicopters.

Further complicating her situation, when Wang-Woodford was arrested at San Francisco International Airport, she had catalogs from China National Precision Machinery Import and Export Corp. displaying material military technology and weaponry, including surface-to-air missile systems and rocket launchers. It just so happens that Treasury’s Office of Foreign Assets Control has sanctioned CPMIEC.

As the number of criminal cases rises, it remains valid to ask how Customs will deal with the backlog of civil cases.

As the mood on Capitol Hill is for the Customs Reauthorization bill to push trade facilitation, how about providing Customs with more staff and equipment to ensure the commercial side of the house takes care of business in a timely manner? It should not take more than a year to process a petition or protest, but the backlog is so great that such time frames are routine.

When will that end?

Susan Kohn Ross is international trade counsel at Mitchell Silberberg & Knupp in Los Angeles. She can be contacted at skr@msk.com.