CBSA Enforcement and Compliance Activities are NOT Postponed

The Canada Border Services Agency (CBSA) recently postponed full deployment of the CBSA Accounting and Revenue Management (CARM) portal for the trade community until October of 2024. However, the CBSA has also announced they are implementing some aspects of the program internally immediately.

What does CARM mean for resident and non-resident Canadian importers?

The CBSA has received several reports from the Auditor General of Canada highlighting opportunities to enhance the agency’s capacity in accurately collecting the rightful revenues owed to the government. Therefore, the agency is highly motivated to improve their performance, assessing and collecting the appropriate amount of duties and taxes on goods imported into Canada.

One key pillar of the CARM stratosphere was an increased focus on compliance and enforcement activities. The CBSA developed new tools to verify and discover instances of non-compliance, without increasing the administrative burden on the agency.

What are the new CBSA enforcement tools?

While the official launch of the CARM portal has been postponed, these new tools are already available—and have been for many months now. Since their launch, the CBSA trade compliance team tasked with monitoring compliance has embraced the use of these tools with enthusiasm.

Three new tools were deployed to monitor and verify importer trade compliance.

1. A Trade Advisory Notice (TAN)

This notice is described as a "nudge" to provide importers with guidance on potential non-compliance issues. A letter is sent requesting the importer review its import declaration and sometimes can provide references to public resources for guidance.

2. A Compliance Validation Letter (CVL)

This letter will be issued in instances where the CBSA suspects non-compliance has occurred. The importer will receive a letter outlining the issue and requesting additional information be provided to the CBSA within 30 days for review.

3. A Directed Compliance Letter (DCL)

Created to target instances of known non-compliance, this letter will include a monetary assessment of the alleged infraction. In some cases, such as instances of suspected fraud, a DCL may lead to prosecution.

Today, these nudges, directions, and enforcements are delivered through traditional mail. However, they are expected to eventually be transitioned to direct electronic delivery through the CARM client portal.

The TAN nudges are largely data-driven and appear to be the favored tool to date. Unlike the full Trade Compliance Verification (audit), these letters require almost no investment in hands-on CBSA resources. The results of these inquiries will also assist the CBSA in assessing a given importer’s risk level and allow the CBSA to devote limited resources to focus on importers that pose a higher risk of non-compliance and under-payment of duty. In essence, they are building a better compliance scorecard system to determine where to spend time and energy.

How to prepare for stronger CBSA compliance measures

1. Prepare for your mandatory transition to CARM

If you have not already done so, be sure to register in the CARM client portal and delegate authority to your customs service provider. This is required for all importers prior to September 2024. Importers and brokers will not be able to account for imported goods after the October go-live date if these steps have not been completed. You should also ensure that your broker is CARM certified and able to clear goods into Canada on your behalf prior to the launch.

2. Know what the CBSA is looking at

The core aspects of compliance activities involving commercial importing include:

  • HS tariff classification
  • Customs valuation (value for duty)
  • Country of origin/preferential tariff declarations

3. Engage your broker to help address compliance risk areas

Your mission is to identify where you may have compliance gaps before the CBSA finds them. With help from your broker, you can:

  • Build or update your HS database
  • Review your valuation
  • Confirm country of origin rules of origin
  • Perform analyses where warranted

4. Understand if you’re subject to SIMA

Through the Special Import Measures Act (SIMA), duties can run upwards of 250% of the purchase price. Importers subject or potentially subject to SIMA import duties for antidumping and countervailing duties must understand the SIMA verification unit is running at full capacity with multiple SIMA requests for information daily. Accordingly, the resulting assessments can be crushing.

5. Keep your compliance scorecard as clean as possible

Keep in mind that while an error discovered due to a TAN “nudge” may not result in an administrative monetary penalty (AMPS), your compliance scorecard will be affected. The CBSA is and will continue to track nudges and their results. Reach out to one of our Trusted Advisor® experts when you need help.

Stay informed

Developments in customs and trade continue to evolve—stay informed to be prepared:

Amy Rose
Manager, Trade Policy
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