Compliance Alert: Trade Fraud Enforcement Intensifies

 Trade Enforcement Update 

We’d like to share with you information that can be found on a recent article published by Sandler, Travis & Rosenberg, P.A. at the following link: What the New Trade Fraud Enforcement Guide Means for Importers.

In summary of that article, a newly released guide by the Trade Fraud Taskforce, available here, highlights a major shift in federal trade fraud enforcement. This document signals a more assertive and unified strategy that importers are beginning to encounter, while establishing a prospective baseline for future regulatory and legal actions.

For companies engaged in international trade, the key takeaway is evident: customs compliance is not just a mere administrative task or extension of customer service. It represents a critical area of corporate risk that carries substantial exposure to civil penalties, criminal liability and suspensions. Consequently, businesses importing goods are urged to transition from a reactive approach to a proactive trade compliance strategy that aligns with their responsibilities as importers of record and customs brokers alike.

Trade Fraud Framed as National Security Issue

- Trade fraud is reframed as a threat to national, economic, and supply chain security.

- Tariff evasion, false declarations and forced labor imports can fund adversary interests and harm domestic markets.

Federal Agency Collaboration

- Multiple federal agencies are coordinating on trade fraud enforcement.

- A whole-of-government approach combines criminal prosecutions, False Claims Act cases, administrative penalties and other remedies in parallel.

More Aggressive Action

- CBP is aggressively recovering unpaid duties and imposing penalties for negligence or fraud.

- Audits, bond claims and in-bond restrictions are increasing for compliance failures.

- Intentional misconduct faces criminal prosecution (fines, merchandise forfeiture, prison sentences).

According to the guide, potential liability extends beyond the importer of record. Enforcement agencies plan to investigate and, when warranted, take action against customs brokers, logistics companies, wholesalers, resellers, downstream distributors and corporate leadership. Businesses must recognize that legal obligations no longer conclude after customs clearance.

The guide stresses that companies can no longer claim ignorance regarding their upstream partners. Importers, as always, are required to exercise reasonable care and due diligence in the form of, but not limited to: auditing supply chains, verifying suppliers, identifying transshipment risks, checking country-of-origin claims, monitoring forced labor and maintaining internal controls. Willful blindness or reckless oversight can be used to support enforcement actions.

Key Shifts in Enforcement Emphasis

While many of the enforcement powers detailed in the guide were previously in place, the document marks a significant pivot in policy across multiple areas:

- Compliance viewed primarily as a customs issue shifting to compliance framed as an important economic and national security issue.

- Focus on importer of record shifting to focus on the entire supply chain.

- Administrative penalties emphasized shifting to more civil and criminal penalties highlighted.

- Forced labor enforcement under a narrower scope shifting to much broader forced labor enforcement.

- Customs and law enforcement viewed separately shifting to explicitly coordinated DOJ-DHS enforcement model

- Reactive compliance expectations shifting to active due diligence and supply-chain oversight expected

Enforcement Priorities

Trade Fraud (most commonly identified, but not limited to):

- fraudulent product and origin claims
- transshipment schemes
- intentional misclassification of goods
- understating the declared value of goods
- free trade agreement abuse
- evasion of antidumping and countervailing duties
- shell company structures
- drawback fraud
- forged product certifications
- port shopping after import refusals
- circumventing mandatory advance notice protocols for imported food products
- illegal timber and wildlife laundering
- adulterated drugs and medical devices

Forced Labor

Forced labor enforcement extends beyond detentions and bans to potential criminal liability for companies and individuals knowingly benefiting or acting with reckless disregard. Importers must treat forced labor compliance as both a customs and criminal risk.

Health and Safety Compliance

Federal enforcement also targets imports regulated by agencies like the FDA, EPA, CPSC, USDA, FWS, and NHTSA. False certifications, unreported defects, or inaccurate declarations for regulated items can result in civil customs actions and criminal prosecution.

What Importers Should Do Now

To align with the broader enforcement framework detailed in the guide, importers are strongly advised to pursue the following measures if they aren’t already:

The guide seems to serve as a clear declaration of the government’s intent to intensify the prosecution of trade violations and outlines a roadmap for upcoming enforcement efforts. Consequently, maintaining comprehensive trade compliance has transformed from a routine regulatory obligation into an essential priority for importers and customs brokers alike.

We strongly encourage you to take this with the seriousness intended, read “A Resource Guide to Trade Fraud Enforcement” published by the Trade Fraud Task Force and stay informed on new initiatives via CBP’s Strengthening Customs Enforcement website.