1. WESCCON 2004 Reducing Risk Through Internal Training: Section 111.28 and the Connection between In-house Training and the Exercise of Responsible Supervision & Control Presented by George R. Tuttle, III George R. Tuttle Law Offices Three Embarcadero Center, San Francisco Phone (415) 986-8780 Fax (415) 986-0908 E-mail:geo.tuttlelaw.com

2. George R Tuttle Law Offices2 WESCCON 2004- Internal Training and 19 CFR § 111.28 Top 5 Excuses Not to Train: “Internal training is expense!” “I don’t have time to put it together!” “It takes too much time away from my staff from writing entries” “No one else has one!” “I don’t know what to cover”

3. George R Tuttle Law Offices3 WESCCON 2004- Internal Training and 19 CFR § 111.28 Do I really need a training program? Yes... your license depends on it!

4. George R Tuttle Law Offices4 WESCCON 2004- Internal Training and 19 CFR § 111.28 § 111.28 Responsible supervision. responsiblesupervision and control (a) Every licensed broker... must exercise responsible supervision and control... over the transaction of customs business...

5. George R Tuttle Law Offices5 WESCCON 2004- Internal Training and 19 CFR § 111.28 What is “Responsible supervision and control” ? 19 CFR 111.1 “Responsible supervision and control'' means: “That degree of supervision and control necessary to ensure the proper transaction of the customs business”

6. George R Tuttle Law Offices6 WESCCON 2004- Internal Training and 19 CFR § 111.28 “Responsiblesupervision and control” “Responsible supervision and control” is a subjective test, meaning: Actions necessary to satisfy § 111.28 will vary depending upon the circumstances same quality of service Licensed Broker must ensure that employees provides substantially the same quality of service when handling customs transactions that the broker is required to provide.

7. George R Tuttle Law Offices7 WESCCON 2004- Internal Training and 19 CFR § 111.28 Factors Customs will consider include: training provided to employees. The training provided to employees. written instructions employees guidelines. The issuance of written instructions and employees guidelines. The volume and type of business. The reject rate for entries. Maintenance of current editions of: The Customs Regulations The Harmonized Tariff Schedule, and Customs issuances (rulings, informed compliance publications, Directives, etc.)

8. George R Tuttle Law Offices8 WESCCON 2004- Internal Training and 19 CFR § 111.28 More factors to consider: Availability of a licensed broker for consultation with employees; The frequency of supervisory visits of an individually licensed broker to another office; frequency of audits and reviews The frequency of audits and reviews by an individually licensed broker of the customs transactions handled by employees

9. George R Tuttle Law Offices9 WESCCON 2004- Internal Training and 19 CFR § 111.28 Customs Oversight & Audit Activities Port activity level varies, but all say they have a program Brokers selected for review based on: Reject rates Identified compliance issues Random/ judgmental selection Importer complaints

10. George R Tuttle Law Offices10 WESCCON 2004- Internal Training and 19 CFR § 111.28 Audit Review Areas: Broker filings Triennial Reports & Employee lists Notification of change of business address, organization, name, or location of records; Financial reporting & client $$$ Relations with unlicensed persons or disreputable persons Customs Transactions & Procedures review

11. George R Tuttle Law Offices11 WESCCON 2004- Internal Training and 19 CFR § 111.28 Customs primary broker management tool is the Port Activity Tracking System (PATS) which contains the following modules: Broker Licensing and Permit Tracking Entry Rejections / Miscellaneous Forms Customs Forms (CF 28, CF 29, CF 4647 & CF 6455A) Informed Compliance Log and Notice National Enforcement Tracking System Reports and Queries A broker’s CM rate is obtained partially from Customs Automated Port Profiling System (CAPPS). CAPPS contains data on the compliance or non- compliance of lines, which are designated by ACS as stratified compliance lines

12. George R Tuttle Law Offices12 WESCCON 2004- Internal Training and 19 CFR § 111.28 Common Errors No or invalid Power of Attorney Failure to maintain conditions of license or permits failure to account for clients' funds misrepresentation of services rendered Failure to file SILs and PEAs late files and late payments Classification mistakes Quota/visa errors Clerical errors: Transpose value Quantity errors Improper currency conversion “dropping invoices” Line item addition errors Missed protest filing dates

13. George R Tuttle Law Offices13 WESCCON 2004- Internal Training and 19 CFR § 111.28 Customs resolves most broker § 111.28 issues through warning letters and face to face meetings But what about customers? Broker errors and mistakes cost clients money create bad customer good will Loss of growth and business opportunity

14. George R Tuttle Law Offices14 WESCCON 2004- Internal Training and 19 CFR § 111.28 Development of in- house training and Procedures produces favorable ROI because Reduce / eliminate errors Reduce employee turnover Improve client confidence Supports increased business

15. George R Tuttle Law Offices15 WESCCON 2004- Internal Training and 19 CFR § 111.28 responsiblesupervision and control Essential to “good” broker practices and the exercise of responsible supervision and control under §111.28 are Employee Guidelines & Desk Procedures Standard Operating Procedures Formal Training Programs

16. George R Tuttle Law Offices16 WESCCON 2004- Internal Training and 19 CFR § 111.28 Responsiblesupervision and control Responsible supervision and control also requires: Internal oversight of employee activities Self-audits & document reviews Documentation of reviews & findings Corrective action plans Follow-up

17. George R Tuttle Law Offices17 WESCCON 2004- Internal Training and 19 CFR § 111.28 Where to Start? Review regulations and legal requirements Obtain compliance info from Customs and clients Conduct a risk assessment Identify possible high risk/ problem areas Develop targeted training and procedures Need Ideas? Look at Customs’ Broker Management handbook on web @ http://www.cbp.gov/linkhandler/cgov/toolbox/legal/di rectives/broker_handbook.ctt/broker_handbook.pdf Consider asking local attorneys for free or low cost risk analysis and in house training/ seminars