1. One Month into ISF Enforcement Where Are We Now?

2. Introductions Lisa Gelsomino, President/CEO – Avalon Risk Management
NCBFAA Preferred Provider, NCBFAA ISF subcommittee
Board of ITSA, TSN eBond subcommittee, COAC Bond Committee (former)
Avalon ISF outreach to over 800 trade participants
Avalon ISF Archives Page at
or ISF Hotline: TISF(8473)
M. Craig Clark, ISF Program Manager – CBP Headquarters
Office of Cargo and Conveyance Security
Mr. Clark began his career at CBP headquarters as Program Manager for SFI
After closing SFI operations in Southhampton, UK he returned to CBP-HQ
As ISF Program Manager, he is national point of contact for all ISF matters
or or
Tom Molloy, Director of Customs & Trade Compliance – UPS
Chair of NCBFAA ISF Subcommittee, Tom is LCB with CCS and CES designations
Over 33 years industry experience, he also holds a Master’s Degree in Psychology or

3. ISF Timeline ISF Action Date ISF Document Port Date
ISF Proposed Rule (NPRM) 01/02/08
ISF Interim Rule /26/09
Flexible Enforcement /26/09
Informed Compliance /26/10
ISF Enforcement /09/13
ISF Final Rule OR&R Review
CBP FAQ After Final Rule
ISF Document
1st notice of ISF bonds CBP 19CFR149(b)
CBP ISF Interim Rule
CBP FAQ dated 07/09/10
CBP ISF Mitigation Guidelines
CBP CSMS Enforcement Message
CBP ISF Web Page

4. © Avalon Risk Management
ISF by the Numbers
January 26 – November 23, 2009
3.4 million ISF-10s
1,900 ISF Filers (90% customs brokers)
99,700 ISF importers on file
95% importers filing ISF
6,000 vessel stow plans
101 million container status messages
January 26 – September 21, 2010
6.2 million ISF-10s
2,350 Filers
194,000 ISF importers on file
97% importers filing ISF nationally
82% compliance in NY/NJ
January 26 – August 12, 2013
16,010,000 million ISF-10s
2,500 Filers
330,000 ISF importers on file
80%+ importers filing ISF nationally
33,000 vessel stow plans
522 million container status messages
Since ISF Enforcement on 7/9/13, 90% of importers are now filing ISFs nationwide.
© Avalon Risk Management

5. ISF Enforcement effective 7/9/13
ISF-10 “U.S. Bound” Cargo
ISF-5 “Transit” Cargo
Carrier Requirements
(3461 Entries, IT, FTZ)
(FROB*, IE, TE)
Vessel Stow Plan
24 Hrs Prior to Lading*
NLT 48 Hrs After Departure*
24 Hrs Prior to Lading*
1. Importer of Record or FTZ Number
2. Consignee Number(s)
3. Seller (Owner) name/address
4. Buyer (Owner) name/address
5. Ship to Party name/address
6. Manufacturer (Supplier) name/address
7. Country of Origin
8. Commodity HTS-6 digit level
1. Booking Party name/address
2. Ship to Party
3. Commodity HTS-6
4. Foreign Port of Unlading
5. Place of Delivery
*Anytime prior to arrival for voyages less than 48 Hrs
For all vessels carrying containers
Container Status Message (CSM) Data
*FROB ISF-5 is required anytime prior to lading
w/in 24 Hrs of Creation or Receipt
ASAP, But NLT 24 Hrs Prior to Arrival
9. Container Stuffing Location
10. Consolidator (Stuffer) name/address
ISFs must contain the lowest bill of lading number (i.e., regular or house) as referenced in the Automated Commercial Environment (ACE).
*Must be linked together as a line-item at the ISF shipment level
*ISFs for “exempt” break bulk shipments are required NLT 24 hrs prior to arrival

6. ISF Enforcement on Local Level
Port Date
ISF Enforcement on Local Level
Each port will implement based on local needs/resource
Notices are all similar, attend local port meetings for details
Port Date
LA/Long Beach /12/13
NY/NJ /19/13
Seattle /22/13
San Francisco/Oakland /25/13
Baltimore /05/13
Port Notice Link
LA Public Bulletin
Pipeline NWK
CBP Trade Information Notice WA
Notice
BWI Port Information Notice
LA/Long Beach
Not enough resource to issue 400 LD claims/day to address all ISF violations.
Not holding consolidated shipments at this time. Note this is not nationwide policy.
Even consolidated shipments not held could be subject to claims for violations.
Each port handling enforcement differently.

7. ISF Compliance CBP expects 100% compliance since 7/9/13
Non-compliant ISFs subject to cargo holds in ACE
Once ISF data received/security assessment made
Other enforcement could include: NIIs or intrusive exams;
As well as Liquidated Damages;
Will vary by port

8. ISF Compliance ISF Liquidated Damages
ISF must be filed timely, accurately and completely.
If not, CBP may assess liquidated damages of $5,000 per violation subject to $10,000 maximum per ISF transaction.
Since 7/9/13, any ISF not filed timely, accurately and completely is in violation of ISF laws and at risk for claims.
That said, CBP’s initial focus is measured approach focusing on “egregious” offenders (non-files, repeat late files, etc.).
HQ will review all liquidated damage claims for 12 months.
Past ISF performance will always matter when CBP considers providing any mitigation.

9. ISF Exposure for Importers
Calculate Exposure from Financial Perspective
Inventory carrying costs based 2-day shipment delay (cargo holds)
Extra costs for holding freight at origin or destination if ISF missing/late
Extra costs for non-intrusive inspection (NII) and/or full examination
Liquidated Damage (LD) Exposure (now or future potential)
One day, ISF violations will receive LD claims routinely like Entry Process.
100/Year % #
Worst
C-TPAT
Best
Average
C1 Bond
Violation% 3% 3
$ 15,000
$ 3,000
$ 6,000
$ 8,500
N/A 5% 5
$ 25,000
$ 5,500
$ 11,000
$ 16,000
10% 10
$ 50,000
$ 11,750
$ 23,500
$ 61,000
$ 50,000
20% 20
$ 100,000
$ 24,250
$ 48,500
$ 73,500
Remember C1 bond limits LD exposure to $50,000/year.
Worst assumes $5,000 liquidated damage per violation, no mitigation
Best assumes $1,000 for 1st time violation, $2,500 for all subsequent violations
C-TPAT assumes 50% reduction of claims
Average, mix of each

10. ISF Exposure for Importers
Entry Process
ISF Process
Issue
Outcome
Late-File
LD = $100
Non-File
LD = # days late
Incomplete/Inaccurate
Corrected Entry
Mitigation
OIC or Petition
Liquidation
One Year
Statute of Limitations
6 Years
Issue
Outcome
Late-File
LD = $5,000
Non-File
Incomplete/Inaccurate
Mitigation
Only Petition/No OIC
Liquidation
ISFs don’t liquidate
Statute of Limitations
6 Years
Entries: Bonds written guarantee future obligation to pay duty and comply with laws
ISF: Right of action occurs 24 hours prior to vessel departure (timely/accurate/complete)
If ISF is late, this results in need for an ISF Bond with “known violations” and “claims”
Insurers don’t insure after a loss occurs (i.e. provide flood insurance while flooded).
Sureties don’t want to write bonds for “known claims” either, but will do so with:
Collateral to cover the potential or known claim amount.
Bonds are not Insurance

11. Customs Bond Contract
CBP requires ISF bonding per CBP 19CFR149(b) & 19CFR113-G
Bond guarantees ISF importer’s compliance with all laws and regulations
Liquidated Damages result from breach of the surety contract
Non/Late File/Incomplete/Inaccurate ISF subject to $5,000/$10,000 max.
Parties to a Customs Bond Contract
Sureties obligate ISF importer’s performance to comply with laws; can subrogate against importer and expect to be made whole.
Importer
(Principal)
Surety Agent
(Avalon)
Customs
Broker $ $
Surety
(T-listed insurer)
Customs
(Obligee) $
$ IF Importer defaults $

12. Questions?

13. Top 10 List of ISF Questions
“So Craig, can you share the hottest ISF News and Top 10 List of ISF questions from the trade?”
“Sure Lisa and Tom, it’s easy if the trade remembers we are now in full stages of ISF Enforcement effective 7/9/13.”
© Avalon Risk Management

14. Top 10 List of ISF Questions
Will CBP place holds on consolidated cargo?
Port of LA/Long Beach advised they do not have resources to place holds on consolidated cargo at this time.
Will vary by port: Oakland, NY/NJ, Miami are all doing so.
When is CBP using the new ISF cargo holds?
When ocean cargo arrives without an ISF
When an ISF is not timely or completely filed
Note an entry cannot be made without a complete ISF
How does CBP consider if an ISF is timely filed?
Vessel Departure Date of the Mother Vessel destined for the U.S. less 24 hours (based on local time)
CBP is currently evaluating if brokers and sureties can access or query the departure date.

15. Question 7 – Will ISF impact C1 Bonds?
No, C1 Bonds will not increase as a result of ISF at this time
ISF claims may impact bond sufficiency per Analytical Formula
Duties, Taxes & Fees x 10%
(previous 12 months) +
10% - unpaid bills not protested and less than 210 days or protested
$ for $ - delinquent bills not protested and over 210 days or denied protest
$ for $ debit vouchers unpaid
$ paid by surety
= minimum bond amount or $50,000
(rounded up by increments of $10,000, up to $100,000 and then by increments of $100,000) A +
Exact Amount B +
Exact Amount C +
Exact Amount D +
Exact Amount E
(rounded up by increments of $10,000, up to $100,000 and then by increments of $100,000) A B C D E
Total Amount =

16. Question 6—How to identify C-TPAT?
When importers are C-TPAT certified….
Consider consolidating with other C-TPAT cargo as best practice
Load cargo that has ISF acceptances in same container
These best practices can help avoid cargo holds for C-TPAT
How can the Trade better identify C-TPAT importers?
You must participate in C-TPAT to have access to the C-TPAT Status Verification Interface to search participants.
Also visit:

17. Top 10 List of ISF Questions
3) Has CBP issued any LD claims already? If so, how many?
Ports have submitted LD claims to HQ and they are pending review. There are less than 100 in total at this time.
Some claims have been approved by HQ to proceed.
4) What does CBP consider “egregious” to issue an LD claim?
This will vary by port depending on the compliance problems they are having with non-filers or repeat late-filers.
5) How long will it take CBP to issue an LD claim? Can CBP go back retroactively to assess claims on or after 7/9/13?
Most claims issued by port within 30 to 60 days of violation depending on resources and must then be reviewed by HQ.
ISFs do not liquidate and are subject to 6 year statute of limitations per 28 USC § 2415(a).

18. Question 2–Use of ISF-10 Late/No Bond?
Yes, CBP still allows use of ISF Submission Type 5
CBP FAQ pp 51-52, CSMS Message # , Quest 7/19/13
ISF-D Single
ISF Submission Type 5
“ISF 10 Late – No Bond”
Potential issuance of LD for $5,000; mitigate 1st time violation $1,000-$2,000
“Admission of guilt or non-compliance,” only use for the “one-time” importer.
Cost of Bond Premium + Collateral/Fees
($1,100 to $5,500 range
depending on mitigating factors)
Cost of NIIs or full examinations plus storage and delay of cargo for inspections
($3,000 to $5,000 range)
CBP prefers an importer file an ISF for security purposes and be properly bonded to meet ISF requirements during full enforcement period.
CBP-HQ has advised that abuse can result in penalties against the ISF Importer under 19 U.S.C. 1595a(b) reserved for serious and repetitive violations.
© Avalon Risk Management

19. Top 10 List of ISF Questions
Number 1
Bill of Lading Match in AMS?

20. Bill of Lading Match in AMS
B/L commonly known as the “11th data element.”
B/L required as part of the ISF transmission
ISF Importer must provide B/L to lowest common denominator
ISF Filer must continue to query AMS to secure a match
This will link ISF to Customs manifest data in AMS to be visible to CBP
CBP cannot target ISF or verify ISF timeliness without match
CBP needs match at least 24 hours prior to cargo arrival to conduct targeting
Failure to match 24 hours prior to arrival may result in cargo hold.
Liquidated Damage claim also possible
OR&R needs to provide legal opinion
Any LD claims should be petitioned
For Full Cancellation if warranted
Or, for the lowest mitigation amount

21. Final Wrap-Up

22. ISF Compliance Best Practices
Per CBP, always better to file ISF timely and update later
CBP prefers that ISFs be amended or updated vs. deleted if changes to the ISF are required to make it accurate and complete.
Update a timely ISF, don’t delete and redo an untimely ISF.
ISFs can be updated until the cargo arrives in the U.S.
19 CFR 149.2(d) states the ISF must be updated “if, after the filing is submitted and before the goods enter the limits of a port in the United States, any of the information submitted changes or more accurate information becomes available.” 
CBP requires updated information and AMS match at least 24 hours prior to cargo arrival for targeting purposes.
Thus, amendments made after 24 hours prior to arrival may be considered inaccurate.

23. ISF Compliance Best Practices
Cannot transfer ISF liability once an ISF Bond is transmitted
An ISF-D Single is obligated at the time the ISF transaction is filed; can only be voided when there is a duplicate or cancelled ISF.
Cannot transfer bond liability from ISF-D Single to C1 Bond.
If ISF Filer uses own bond, they will assume liability as ISF importer.
Note: CBP will always make a claim against the bond that was originally filed with the timely ISF submission, regardless of any updates made prior to the cargo’s arrival.
Why? Because right of action accrues when the ISF is first transmitted to be considered timely, accurate and complete. That liability will always remain and cannot be modified unless the ISF can be legitimately deleted.

24. Contact and Links to Information
Avalon Risk Management
Underwriting Questions
Group phone line: Gabriela Craver: Surety Underwriting Manager
Claims Questions
Zuleika Medina: Surety Claims Manager
Web Merlin IT Questions:
Additional ISF Information
CBP
CBP ISF Page
CBP ISF FAQs 7/9/2010
ISF Liquidated Damage Mitigation Guidelines
Continuous Bond Formulas and Sufficiency Information

25. Thank you for being with us today! Avalon Risk Management
You will receive 1 CES or CCS credit
for your participation.
For more information visit:
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