Countdown to ACE: We’ve Seen the Carrot, Now for the Stick – Penalties of Non-Compliance

In our Countdown to ACE blog series, we’ve looked at the overall impact of the new regime on the supply chain and the benefits to be gained from adoption. Of course alongside the ‘carrot’ in the form of faster processing, improved productivity and financial benefits, CBP has also ensured there is a corresponding ‘stick’ to ensure compliance in the form of penalties, which is where our focus now shifts.

U.S. Customs has accelerated its move to ACE, which will replace the current Automated Commercial System (ACS) for trade data processing. The first mandatory date, which is earlier than previously proposed, is May 1, 2015. From this date, all electronic export and import manifest data must be transmitted, in advance, electronically via ACE-enabled systems, requiring compliant Customs software such as that provided by Kewill, and the master of any ship, driver of any vehicle or the pilot of any aircraft found not to be in compliance with the advance notification rules will be subject to a monetary fine.

While the fine, which is set at $5,000 for the first violation and $10,000 for each subsequent violation, is certainly not insignificant and could really add up for repeat offenders, the real penalties are likely to be created by delays at borders where the e-manifest has not been submitted on time, or contains incomplete or inaccurate information.

Missing data will generate an immediate fail, which will result in goods being turned away or detained, with the associated additional costs, including labor, storage and fuel, while the situation is resolved. Not to mention the management burden of having to get involved to resolve the situation and manage the scheduling impact – both for the customer whose goods are held up and any others whose shipments may be delayed as a knock-on effect. The overall impact of even a quickly-resolved delay caused by missing data could easily run into additional costs of thousands of dollars for the shipment delayed, with the wider impact – and cost – more difficult to quantify.

Inaccurate data can cause a whole load of different problems, with additional paperwork or product samples potentially being required for testing. Depending on the goods under transportation, this may well generate even longer delays and even higher additional costs.

Having invested a great deal of resource in publicizing the introduction of ACE and working with trade bodies and Customs software providers to establish a well-defined pilot program well in advance of the planned mandatory dates, it is unlikely that CBP will show leniency towards those that do not comply, particularly not for large businesses that have no real excuse for being unprepared. The very nature of a switch to advance and electronic filings means that there is no paper option and no scope for negotiation with border staff – hoping for a guard having an off-day or being able to appeal to someone’s better nature just won’t be possible.

So it’s a straightforward case of ‘get your house in order’ and do it now! The deadlines aren’t going to slip – they’ve already been brought forward – and the clock is ticking. Shippers – speak to your Customs broker and ask them what they’re doing to prepare and Customs brokers – if you’re not already in discussions or taking action with your Customs software provider then do so now as a matter of urgency. Kewill already has projects underway with our Customs broker customers to ensure they will be compliant well in advance of the mandatory dates, and many are already reaping the associated benefits, so it makes no sense to leave it until the last minute.

Look out for the next in the Kewill ACE blog series for a look at the impact of similar initiatives that have already been implemented worldwide as part of the global eCustoms agenda, including the Import Control System (ICS) in the European Union. Feel free to contact us for a ‘healthcheck’ on how prepared your business and customs compliance software is for ACE compliance.

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