Importers face increased identity theft risk
Importers, especially companies that participate in the Customs-Trade Partnership Against Terrorism, should be on the lookout for criminals who attempt to steal their identity and circumvent customs laws in their name, a U.S. Customs and Border Protection official warned Jan. 20.
Incidents of importer identity theft are on the rise nationwide and in the Los Angeles area, said Anne Maricich, assistant port director for trade at Los Angeles International Airport.
The criminals are able to obtain the importer's tax identification number and address, and file a customs entry under its name falsely declaring products in the shipment — leaving the legitimate business on the hook for any consequences. The schemes are primarily being used to bring in counterfeit goods or other contraband, Maricich told trade specialists at a seminar in Torrance, Calif., organized by the American Association of Exporters and Importers.
She declined afterwards to provide a figure for the number of identity theft cases. But Bruce Leeds, a Los Angeles-based attorney for trade law firm Braumiller & Schultz, said he heard from a CBP officer several months ago that there have been at least 80 known cases in the Los Angeles area in the last couple of years.
In several cases, the importers did not know they were at risk until CBP issued a notice of detention following a cargo exam. The criminals used the false identity to smuggle goods through ports of their choice, not just ones the importer favors, Maricich said.
She cautioned importers to make sure they know parties to whom they give power of attorney and customs brokers not accept such a document at face value. There have been instances in Los Angeles in which brokers accepted a power of attorney presented by a freight forwarder, but the document did not have a legitimate signature from the importer.
Maricich, who worked at CBP headquarters helping to develop trade compliance policy before taking her post at LAX last February, urged importers and brokers to double check their customs transaction reports available through CBP's Automated Commercial Environment and Importer Trade Activity reports (ITRAC), 'to make sure the entries you see on those reports are your entries.'
ACE portal users can access their importing history for free, while others can get the ITRAC reports for a nominal fee. The reports, for example, could help an importer detect whether a broker it normally doesn't use has made an entry on its behalf without a valid power of attorney.
The main risk for brokers is non-regular customers that want an entry filed quickly because the goods have or are about to arrive.
'So here's my advice: Know who you're doing business with. Take that extra step to check the information, validate it, pick up the phone,' she said.
Criminals could target the 9,500-plus certified members of the voluntary Customs-Trade Partnership Against Terrorism because they receive fewer security exams based on the presumption that they are low-risk, Maricich warned.
'If you're a C-TPAT importer I fear your Importer of Record number is particularly lucrative,' she said. 'So, please guard that.'
CBP plans to hold breakout workshops on identity theft at its annual C-TPAT seminar scheduled March 17-19 for Anaheim, Calif., to make traders more aware of the problem.
Some security and logistics experts have argued for years that terrorists who want to use a shipping container to smuggle a weapon or other material into the country are likely to target trusted shippers.
| Owen |
About half of the 71 security violations involving C-TPAT companies during the past couple of years involved Mexican trucking companies, even though that sector of the program only represents about 6 percent of the membership, said Todd Owen, executive director of cargo and conveyance security, in testimony to Congress last year.
A Nov. 23 Associated Press story quoted a former Mexican customs agency official and a San Diego trade attorney as saying that organized crime groups appeared to be trying to move their illegal product through major trucking companies rather than transporting it themselves.
But CBP officials say the number of compromised trucking companies with fast processing privileges on the Southwest border has stayed relatively flat over the years even as C-TPAT enrollment has continued to grow. They argue there is no clear evidence that C-TPAT members are being targeted as conduits for smuggling.
'If you ever suspect that your ID has been stolen please bring it to our attention. We take every allegation very, very seriously. I promise you we'll look into it,' Maricich said.
CBP, Maricich added, is working with sister agency Immigration and Customs Enforcement on the identity theft problem.
One of the consequences the legitimate importer likely will suffer from identity fraud is a penalty for not properly submitting the new Importer Security Filing, which requires advance, electronic commercial data on ocean shipments, Leeds said.
They'll also have to prove they are innocent and not a party to importing contraband or counterfeit merchandise.
The additional detail in the ISF, however, could make it more difficult for amateurs to steal an importer's identity on an ocean shipment. But it may not be an obstacle for professionals already capable of obtaining the importer ID number, he added.
Maricich said the Los Angeles Customs district also plans increased focus this year on making sure importers have the right to make entry.
The assistant port director said CBP officers want to make sure the importer has title to the goods and therefore has the right to make entry. Doing so without holding up the shipment requires the importer to give a prompt response to any inquiry.
'So, if you're using a middleman, know who you are doing business with. Know the declarations they are making on your behalf,' she said.
Cracking down on these and other trouble spots means doing more with less because of budget limitations, Maricich stressed.
The Los Angeles field office, which encompasses the nation's busiest cargo port complex and the second-busiest cargo airport, received 2.5 million customs entries, or 10 percent of the national total, and collected $6.6 billion in duties, representing 30 percent of nationwide collections, in fiscal year 2009. Twelve percent of the value of all imported goods, or $210 billion, entered the country through the Los Angeles gateway.
She said safeguarding the nation's revenue, safety and security at high-volume cargo ports of entry such as Los Angeles necessitates the use of risk-management techniques, including partnership programs such as C-TPAT and the Importer Self-Assessment.
CBP takes into consideration companies that have nationally managed customs accounts and approved systems for top security and regulatory compliance when deciding on where to target enforcement blitzes, who receives requests for more information about the entry and other matters, she added.
Maricich appealed to trade associations and businesses to include local CBP officers in any training and educational sessions because limited resources have constrained CBP from providing supplemental training on trade matters.
Maximizing the use of electronic cargo release, instead of paper, has also improved CBP efficiency at Los Angeles International Airport, she said.
Paperless release at LAX reached 86 percent on nearly 850,000 entries compared to 65 percent three years ago and the national average of 54.6 percent. Los Angeles ports of entry combined release 83.6 percent of cargo by electronic means.
The other 14 percent of cargo at LAX that involves paper processing usually involves jurisdiction by other government agencies or cargo that must undergo an exam, Maricich said. Until Customs further develops ACE functionality through the single government window for documentation known as the International Trade Data System, 'then we're going to be stuck collecting paper,' she said.
Interceptions of pests in agricultural shipments at Los Angeles International Airport have also increased during the past year with the opening last June of a refrigerated warehouse dedicated to receiving shipments of cut flowers, Maricich said.
The new Mercury Air Cargo warehouse is being served by six more freighters per week carrying cut flowers and fresh vegetables from South America to Asia. CBP officers have found pests that could damage U.S. crops and natural vegetation in shipments and aircraft cargo holds, she said.
In an effort to operate more efficiently with the same number of personnel, the local field office in November moved its agriculture inspection staff to a seven-day work week to better align manpower with cargo flow and demand for inspections, Maricich said. ' Eric Kulisch