Previously, we reported on the likely impacts on industry from the recent announcements by the Minister for Home Affairs regarding increased control on cargo and those handling and the reporting of its movement through the supply chain.
Background
One of the significant changes for industry was to be the inclusion of revised and additional conditions in licences for customs brokers. As many readers would be aware, customs brokers are subject to a licensing regime under the Customs Act 1901 (“Act”) as are the operators of many “customs controlled premises” such as warehouses and depots. By way of comparison, others operating within the supply chain in handling cargo and who also report the movement of cargo in the integrated cargo system (“ICS”), such as freight forwarders and those who make Self-Assessed Clearance Declarations are not so licensed.
Presently, given the terms of the Act, the Australian Customs and Border Protection Service (“Customs”) is only able to revise and add conditions for licences for customs brokers at the time of the grant or the renewal of a licence. As the majority of licences for customs brokers are to be renewed and issued from 1 July 2012, Customs has only been provided with a very small window of time to impose these additional conditions to accommodate those additional conditions promised by the Minister in his various media releases.
Issue of new Notice by Customs
In accordance with the recent comments by the Minister, Customs has now issued Australian Customs and Border Protection Notice 2012/29 (“Notice”). The Notice reflects certain amendments from an earlier draft following submissions by the CBFCA and ourselves. The Notice sets out a description of the usual statutory conditions which are to be imposed in renewed customs brokers’ licences. However, the Notice also sets out two new categories of conditions which are to be imposed on new licences which are being renewed. These new categories are separately described below.
Conditions addressing integrity and compliance with the law by customs brokers
The Notice refers to types of conditions now to be imposed to achieve these general aims. These will operate alongside conditions imposed by the Act. However, there are three specific obligations which will attract attention:
- The obligation on the holder of a brokers licence to ensure that the licence holder and “any person who participates in the work of the customs broker” completes a Customs “consent to obtain personal information” form to allow Customs to undertake an integrity check on each relevant person. That form is to be forwarded by the holder of the licence to Customs if requested. Presumably, this obligation is included to allow Customs to determine whether all such parties are “persons of integrity” (as defined in the Act) and, if they are not such a “person of integrity” then their removal from involvement in the business could be dictated by Customs. For these purposes:
- The term “a person participating in the work of a customs broker” is defined in the General Notes to the new condition to include those having authority as a nominee or an agent, officer or employee of the customs broker or a person doing any acts on behalf of an owner of goods or one who has the authority to direct a person who undertakes those tasks.
- The provision will allow Customs to undertake an integrity check on each relevant person. Presumably, that form of integrity check will include checking intelligence on criminal activities.
- Customs brokers, those employing customs brokers and those employing parties who participate in the work of a customs broker will need to change their employment practices to include an entitlement to require such parties to complete such forms as required by Customs. It will also mean the inclusion of such an entitlement in existing contracts which may create some employment relations issues.
- The obligation on the holder of a brokers licence to report to Customs as soon as reasonably practicable after it becomes aware that information it has been provided to Customs by or on behalf of a client or broker is false, misleading or incomplete. This is a new condition which clarifies the previous uncertainty about the legal and ethical obligations of a customs broker to report errors, misstatements or omissions to Customs. However, it does raise the following issues:
- At the moment, the condition does not differentiate between types of “false, misleading or incomplete” information which requires reporting to Customs. As readers would be aware, even the slightest error in an import declaration could constitute “false, misleading or incomplete” information. As a result, this could require the reporting of each and every error however small. Hopefully, Customs will subsequently publish a guideline which sets out specifically the types of information to be reported and a “materiality” threshold requiring reporting.
- The new condition creates a fundamental tension between the normal expectations of confidentiality as between the customs broker and its client and the new obligation on a Customs broker to report all errors, false statements or omissions. Clients who previously would have expected confidentiality may now find that their trusted and professional service provider is obliged to report such issues to Customs. The client may consider this reporting to be in breach of the contract of service between the customs broker and the client. Accordingly, licensed customs brokers will need to amend their terms and conditions of trade to specifically reserve the right to report as required by this condition and, at the same time, customs brokers should specifically be alerting their customers to these new obligations.
- Customs brokers will need to ensure all those employed by them and who provide information to them are made aware of this obligation so that the broker can comply with its obligation.
- The reporting of the information may have civil and criminal consequences for the broker if it leads to perceived involvement in an offence. This suggests that Customs are seeking to remove the basic privilege against self-incrimination, as it is such “incriminating” information which Customs is seeking. Hopefully, Customs will issue some clarification to the effect that if information is provided under this condition a customs broker will not be deemed to be liable or held liable unless there is direct evidence of deliberate involvement with the offence. – A question is raised as to the use to which the information will be put by Customs and the extent to which those providing the information will then be required to give evidence against former clients or in open court and what level of protection will be afforded by the government to those providing such information in such a way. » The obligation on the holder of a customs broker licence not to allow systems or information provided by Customs to be used for an unauthorised purpose or to assist, aid, facilitate or participate in any unlawful or illegal activity. The conditions state that examples of unauthorised activities will be published and placed on Customs’ website. This will mean that those associated with customs brokers’ practices will need to carefully monitor the use of Customs’ systems (ie the ICS, Customs Interactive and otherwise), their use and for which purpose. Customs brokers will also need to advise their insurers of these changes as compliance with these new conditions may lead to increased levels of liability for customs brokers for which they would be seeking indemnity under their relevant insurance policies including indemnity for legal costs.
Conditions associated with continuing professional development
In a manner consistent with other providers of professional services, Customs is now imposing an obligation on “natural person” holding a customs brokers licence to undertake accredited continuing professional development (“CPD”) as a condition to their licence. According to Customs, the aim of the scheme is to:
- “reinforce the concept of a licensed customs broker as a practitioner in a distinct and valuable profession
- provide opportunity and motivation for all licensed customs brokers to maintain and update their professional knowledge and skills
- afford greater protection for the Commonwealth and the Australian public that licensed customs brokers will be better able to provide their services with propriety, skill and expertise and
- complement and support other Customs and border protection initiatives designed to increase and enhance compliance with the laws relating to goods under Customs’ control.”
Again, this obligation is only being imposed on persons who hold customs brokers licences and not on the holders of other licences or other persons involved in the movement of goods or reporting to Customs who are not required to be licensed. This certainly sets a higher standard for customs brokers. This part of the Notice is still subject to consultation and change.
The Notice sets out the CPD “points” which will be required in areas (broker obligations, risks and ethics and professional brokerage skills). The requirements sets the requirements for points from mandatory streams and from other streams. For the period from 1 July 2012 until 30 March 2013 there are no obligations to secure points but the obligations to secure points go from 10 points (1 April 2013 to 31 March 2014) to 20 points (from 1 April 2014 to 31 March 2015).
The conditions raise the following additional issues:
- A broker is required to keep accurate and auditable written records of attendance at CPD courses to be provided to the CEO on request
- The holder must notify the CEO by 15 April 2015 if the holder has failed to complete the minimum number of points by 31 March 2015 and provide a written explanation of the reasons for such failure; » The Notice then sets out more details on the rationale for the CPD requirements, what they may contain and by whom they might be provided
- The new CPD requirements will be monitored by Customs in conjunction with the National Customs Brokers Licensing Advisory Committee and presumably both bodies will be afforded significant additional resources to monitor this new requirement.
