In recent updates, we have referred to the actions by the Minister for Home Affairs and the Australian Customs and Border Protection Service (“Customs”) in response to perceived problems with crime, corruption and security at ports and airports and within the private supply chain.
The response has included the adoption of “Integrity Testing” for various Commonwealth officials and employees, increased Customs intervention and additional conditions being imposed in the licences to be issued shortly to licensed customs brokers.
Customs has now turned its attention to those operating licensed depots and warehouses (including duty-free premises). To this effect, Customs issued Australian Customs and Border Protection Notice No. 2012/35 (“Notice”) yesterday afternoon which sets out new conditions to be imposed upon such licence holders. The ability to impose such new conditions was flagged by amendments to the Customs Act 1901 (“Act”) last year which amendments were subject to notice by us and discussions in various CBFCA forums.
The Notice includes details of the conditions to be imposed on operators of licensed premises to be issued from 1 July 2012, which conditions will include the statutory conditions imposed by the Act, “Additional Conditions” and “Specific Conditions” (dictated by the relevant licensed premises).
Generally, the new Additional Conditions and Specific Conditions are what may be expected given the new focus on integrity in the supply chain and new conditions being imposed on licensed customs brokers. They also include new obligations on the holders of licences as to the management and the handling of goods, reporting to Customs and reporting details of those employed by such licence holders. All of them will increase liabilities and risks for those operating such premises.
Some selected examples of the new obligations are as follows:
- If requested by Customs, there will now be a requirement on a licence holder to ensure that the licence holder and all of its staff in a position of “management and control” must complete forms to consent to Customs securing personal information. This is to allow Customs to establish whether those persons are “fit and proper”.
- If requested by Customs, a licence holder must provide certain details of all staff employed at licensed premises.
- A licence holder will be required to provide a written report of all events which lead to the theft, loss, damage and/or pillage of goods including break-ins and attempted break-ins to the licensed premises. There is no “materiality” threshold adopted so that all such incidents must be reported in writing.
- There are new security issues such as the requirement to install and maintain CCTV (and retain electronic footage from such CCTV) and related alarm systems which must be monitored.
- Licence holders must report any breaches of security. • A licence holder will now be obliged to report any suspected breaches or offences of laws by any persons related to the licensed premises. That obligation varies. For example, a depot operator must report any suspected breaches or offences of “Customs related laws” (very broad to also cover tax and quarantine offences) while a warehouse operator only need report in relation to any such offence or breach relating to the “Customs Acts”.
- Directions by Customs to licence holders as to the holding, management, packing and unpacking of goods in licensed premises.
- Obligations as to “outturn” reporting under the Act together with associated reporting of surplus or short landed goods.
- Obligations related to the retention of commercial documentation and providing access to that documentation to Customs.
As with the recent conditions which Customs will now impose on licensed customs brokers, these new conditions will impose significant additional reporting obligations on those holding licences for licensed premises. The Notice makes it clear that failure to meet any conditions of a licence is a very serious matter and constitutes a breach under the Act which could lead to the issue of an infringement notice, a prosecution in court, further conditions being imposed on the licence or a cancellation of the licence. Accordingly, it will place a premium on the operators of licensed premises to be aware of these new obligations and comply with these new obligations in full. Doubtlessly, it will also require those operating licensed premises to consult with the insurers regarding additional levels of insurance and to change various work practices including relating to the employment of staff at licensed premises.
Taken together with other recent amendments to the Act to create new offences for “failure to amount for goods under Customs control”, then those operating licensed premises have had significant increases to their operating risks.