CBP Details New Licensed Broker Sufficiency, Responsible Supervision Factors in Fact Sheet

“A brokerage must employ a sufficient number of licensed brokers relative to the job complexity, similarity of subordinate tasks, physical proximity of subordinates, abilities and skills of employees, and abilities and skills of the managers,” the fact sheet said. One factor is the size of the brokerage, with a larger brokerage needing to employ more licensed brokers than a smaller brokerage. Size can depend on number of office locations, number of employees, number of clients, number of ports of entry where a broker transacts business, ratio of employees to managers and the presence of a broker compliance department, according to the fact sheet.

A brokerage with a lot of inexperienced employees might need more licensed brokers, as might one with inexperienced managers. Also relevant is the physical proximity of subordinates to a manager, and in particular the ease of subordinates’ ability to obtain “advice, concurrence, and vetting from a manager who is on-site or readily accessible,” the fact sheet said.

Brokerages with a high volume or value of entries may need more licensed brokers. Brokers also should consider the complexity of their transactions, with brokers filing entries subject to CBP priority trade issues, PGA requirements, certain commodities, broad ranging classifications and many transportation modes as requiring more licensed brokers.

Finally, CBP also will consider a broker’s reject rate and previous violations or general level of non-compliance. That includes providing incorrect information on merchandise associated with priority trade issues; errors or omissions that result in avoidance of an inspection or entry review; failure to properly execute power of attorney or customs bonds, retain records or respond to CBP requests; and the number of penalties issued.

“A brokerage that is generally compliant may not need to employ as many licensed brokers as a brokerage that has a record of noncompliance,” CBP said.

The fact sheet references a new section of CBP’s Part 111 webpage that lists example considerations for the agency’s new responsible supervision and control factors. Among the considerations are the existence of an internal handbook or manual and resources provided to employees, including CBP-issued guidance and information on the Part 111 changes. CBP also will consider whether a broker maintains a schedule and record of visits to offices without an individual licensed broker and whether the individually licensed broker maintains an audit and review schedule of employees’ work and associated records, in particular for high-risk customs business transactions.

CBP also will look to whether the individual licensed broker pursues continuing education opportunities specific to the industry focus of the brokerage, an accounting system to ensure duty payments are timely submitted to CBP, as well as procedures to file an entry and notify CBP when the importer has failed to provide duty payment.

For new responsible supervision and control factors 12 and 13, which involve communications and responsiveness with CBP and internally, respectively, CBP will consider "whether the broker maintains evidence of timely responses to CBP inquiries and notices” and “evidence that the broker takes appropriate action when provided direction from CBP.” Also under consideration will be “evidence that problems with a customs transaction or employee’s conduct are immediately reported to officers” of the brokerage “and promptly resolved,” as well as “evidence that the members are keeping the board informed of the volume of operations so the board can make additional hiring determinations as needed.”