[Federal Register: June 17, 2002 (Volume 67, Number 116)]
[Notices]               
[Page 41298-41300]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17jn02-98]                         

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Customs Service

 
Importer Self-Assessment Program

AGENCY: United States Customs Service, Department of the Treasury.

ACTION: General notice.

-----------------------------------------------------------------------

SUMMARY: This document advises the public of the implementation of the 
Importer Self-Assessment (ISA) program and describes the requirements 
for participation in, and benefits under, the ISA. The ISA, which was 
developed by Customs under its regulatory audit authority, allows 
interested importers to assess their own compliance with Customs laws 
and regulations. Participation in the ISA is open to all importers who 
are participating members in the Customs-Trade Partnership Against 
Terrorism.

DATE: Participation in the ISA will be open to all qualified importers 
beginning on June 17, 2002.

FOR FURTHER INFORMATION CONTACT: Customs Internet website (http://
www.customs.gov/imp-exp1/comply/isa.htm) or Russell Ugone, Director, 
Trade Agreements Branch, Regulatory Audit Division (202-927-0728).

SUPPLEMENTARY INFORMATION:

Background

    As a consequence of the passage of the Customs Modernization 
provisions of the North American Free Trade Agreement Implementation 
Act (Public Law 103-182, 107 Stat. 2057), an important objective of 
Customs in the trade compliance process has been to maximize importer 
compliance with U.S. trade laws while, at the same time, facilitating 
the importation and entry of admissible merchandise. To meet this goal, 
Customs has made a comprehensive effort to review, improve, and 
redesign, on an ongoing basis, the trade compliance process using 
established business practices, reengineered tools, and new 
methodologies that improve customer service without compromising the 
enforcement aspect of the Customs mission.
    In order to enable interested importers to participate in a program 
that would allow them to assess their own compliance with Customs laws 
and regulations on a continuing basis, Customs on April 24, 1998, 
published in the Federal Register (63 FR 20442) a notice of a plan to 
conduct a test regarding the Importer Compliance Monitoring Program 
(ICMP). On April 30, 2002, Customs published a notice in the Federal 
Register (67 FR 21322) advising the public of the termination of the 
ICMP test because importer participation in the ICMP remained below the 
level anticipated by Customs when the ICMP procedures were developed. 
That notice stated that the ICMP was being discontinued in favor of a 
new program. The new program, Importer Self-Assessment (ISA) will 
continue the self-assessment principles of the ICMP while relying on 
new methodologies which provide upfront benefits and a more flexible 
approach.
    The purpose of this notice is to describe the operation of the ISA, 
including the requirements for participation in, and benefits under, 
the ISA program.

Description of the Importer Self-Assessment Program

Overview

    The ISA program is a joint government-business initiative designed 
to build cooperative relationships that strengthen trade compliance. It 
is based on the premise that importers with strong internal controls 
achieve the highest level of compliance with Customs laws and 
regulations. The ISA program provides a means to recognize

[[Page 41299]]

and support importers that have implemented such systems.
    All importers who are current members of the Customs-Trade 
Partnership Against Terrorism (C-TPAT) may apply for ISA by signing an 
ISA Memorandum of Understanding (MOU) and completing an ISA 
questionnaire. Customs will then assess the applicant's readiness to 
assume the responsibilities of ISA. When signed by both parties, the 
MOU will establish a partnership between the importer and Customs and 
will provide further benefits as described below. ISA applications will 
be accepted beginning on June 17, 2002.

ISA Participation Requirements

    In order to participate in the ISA program, an importer must:
    1. Become a member with full benefits of the C-TPAT.
    2. Be a resident importer in the United States with a minimum of 
two years importing experience.
    3. Agree to comply with all applicable Customs laws and 
regulations.
    4. Have and maintain a system of business records that demonstrates 
the accuracy of Customs transactions.
    5. Complete an ISA questionnaire and sign an ISA MOU under which 
the importer agrees to:
    a. Establish, document, and implement internal controls;
    b. Perform periodic testing of the system based on risk;
    c. Make appropriate adjustments to internal controls;
    d. Inform Customs through appropriate disclosures of material 
errors identified through company reviews;
    e. Maintain an audit trail from financial records to Customs 
declarations;
    f. Maintain results of testing for five years and make test 
information available to Customs on request; and
    g. Submit an annual written notification to Customs to confirm the 
identity of the company ISA contact, and confirm the importer continues 
to meet the requirements of the ISA program as specifically listed here 
and in the MOU.
    6. Have the ability to connect to the Internet.

Application Process

1. Required Information
    Each application for participation in the ISA program must include 
the following information and documentation:
    a. The importer's name;
    b. A unique importer number (for example, SSN, EIN, Customs 
Assigned Importer, DUNS);
    c. A statement certifying to the importer's participation in C-
TPAT;
    d. A statement certifying to the importer's ability to connect to 
the Internet; and
    e. A signed ISA MOU and completed ISA questionnaire.
2. Customs Review of Application
    After the importer has submitted an application, Customs will 
review the company submission. This review will include a risk 
assessment of the applicant and review of the application to determine 
the applicant's readiness to assume responsibilities for self-
assessment. In some cases a Customs multi-disciplinary team may visit 
the applicant to consult with the company, to discuss and review the 
company's internal controls. This will not be an audit and will not 
involve extensive testing. The purpose of the consultation is to 
determine if the applicant is ready to assume the responsibilities of 
self-assessment and to provide Customs assistance and training as 
appropriate. If Customs determines that the company is not ready to 
assume the responsibilities of self-assessment, Customs will continue 
to work with the company to strengthen and improve their program. If 
Customs determines the applicant is ready to assume the 
responsibilities of self-assessment, Customs will sign the MOU.
    Customs reserves the right, in its discretion, to approve or 
disapprove an application. Further, in selecting applicants for 
participation in ISA, Customs reserves the right to establish 
priorities for the processing and approval of applications based upon 
the volume and/or nature of each applicant's Customs transactions and 
other factors, including whether the applicant had a previous 
designation as a low-risk importer, whether the applicant made a prior 
application under the ICMP test, and whether the applicant was engaged 
in management processes involving a full-time Account Manager from 
Customs. First priority will be given to importers with low-risk 
designation.

ISA Potential Benefits

    Once accepted into the ISA program, the importer becomes eligible 
for the following benefits:
    1. The importer will be entitled to receive entry summary trade 
data, including analysis support, from Customs.
    2. Consultation, guidance, and training by Customs will be 
available to the importer as requested and as resources permit (for 
compliance assistance, risk assessments, internal controls, Customs 
audit trails, etc.).
    3. There will be an opportunity to apply for coverage of multiple 
business units.
    4. The importer will be exempt from all comprehensive compliance 
audits (accounts may be subject to onsite examinations for specific 
reasons but will not be subject to comprehensive assessments of all 
Customs operations).
    5. The importer will be able to use a hotline to Regulatory Audit 
Division key liaison officials.
    6. With respect to an importer's right to make a prior disclosure 
pursuant to 19 U.S.C. 1592(c) or 1593a(c) and 19 CFR 162.74 when the 
importer becomes aware of facts that may represent a violation of 19 
U.S.C. 1592 or 1593a, an ISA participant may utilize the following 
process: Unless, during Customs assistance, consultation or training 
with an ISA participant, Customs becomes aware of errors in which there 
is an indication of a fraudulent violation of 19 U.S.C. 1592 or 1593a, 
Customs will provide a written notice to the participant of such errors 
and allow 30 days from the date of the notification for the participant 
to assess and, if determined necessary, to file a prior disclosure 
pursuant to 19 CFR 162.74. This benefit does not apply if the matter is 
already the subject of an on-going Customs investigation.
    7. In the event that civil penalties or liquidated damages are 
assessed against an importer, the importer's participation in ISA will 
be considered in the disposition of the case.
    8. The importer will have access to a Customs team consisting of an 
Account Manager, an auditor and a trade analyst assigned to service ISA 
participants;
    9. Additional benefits may be made available, tailored to industry 
needs (by mutual agreement).

ISA Continuing Participation Requirements

    ISA participants must remain in compliance with the requirements of 
the ISA MOU, which include the annual notification to Customs. In 
connection with this notification, Customs will determine if additional 
discussions or reviews of company controls or documentation are 
necessary. In addition, ISA participants are responsible for making 
appropriate ongoing changes to internal controls as needed.
    As indicated above, ISA participants as a general rule will not be 
subjected to any routine or periodic on-site reviews or audits, other 
than

[[Page 41300]]

consultations with Customs account managers and auditors for training, 
support and compliance improvement purposes. However, a participant may 
be subject to an audit or on-site review of a specific issue related to 
an identified trade compliance risk. In such instances, Customs and the 
participant will work together to determine a mutually acceptable 
course of action wherever possible.
    If a participant fails to follow the terms of the MOU, fails to 
exercise reasonable care in the execution of participant obligations 
under the program or fails to abide by applicable laws and regulations, 
the participant may be subject to removal from the ISA program. If 
Customs believes that there is a basis for proposing the removal of a 
participant from the ISA program, a written notice of proposed removal 
will be provided to the participant and will apprise the participant of 
the facts or conduct warranting removal. The participant may respond to 
the proposed removal by writing to the Director, Regulatory Audit 
Division, U.S. Customs Service, 1300 Pennsylvania Avenue, NW., 
Washington, DC 20229, within 15 days of the date of the notice of 
proposed removal. The participant's response should address the facts 
or conduct charges contained in the notice and should state how 
compliance will be achieved. A final written decision on the proposed 
removal will be issued to the participant by Customs after the 15-day 
response period has closed. However, in the case of willfulness or 
where public health interests or safety are concerned, a removal from 
the ISA program may be effective immediately as a final action and 
without opportunity for written response.
    Detailed information concerning the ISA program is maintained at 
the Customs Internet website (http://www.customs.gov/imp-exp1/comply/
isa.htm). The ISA Handbook available at that website contains general 
information and forms needed to apply for the program and specific 
information and details about program requirements and benefits.

    Dated: June 13, 2002.
Douglas M. Browning,
Deputy Commissioner of Customs.
[FR Doc. 02-15308 Filed 6-13-02; 2:15 pm]
BILLING CODE 4820-02-P