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Importer Security Filing (ISF): Concept, Benefits, and Best Practices

Understanding the Background

Countries across the globe today face elevated levels of risks, in the form of various threats to national and economic security. These risks emanate from the actions of countries damaging to a country or groups engaged in illegal or subversive activities. It is not inconceivable that such hostile entities could attempt to import goods and equipment into the country that could threaten the country’s citizens and its image at large.

For the US, the U.S. Customs and Border Protection (CBP) has a huge role in this equation, introducing several legislative and associated initiatives to curb imports of embargoed or proscribed commodities.

The Importer Security Filing (ISF) is one of those crucial federal regulations, which took effect on January 26, 2009.

What is the Importer Security Filing (ISF)

Officially termed Importer Security Filing and Additional Carrier Requirements, the rule is commonly called “10 + 2”, alluding to the number of pieces of information to be submitted thereunder.

The purpose is to enhance the CBP’s ability to identify high-risk shipments or cargo arriving to prevent smuggling and ensure cargo safety.

The rule is primarily aimed at containerized ocean imports while exempting imports of bulk cargo or other transport modes. The filing is to be submitted to the CBP no later than 24 hours before the cargo is loaded on the vessel destined to the US.

While the ultimate responsibility of providing the data rests with the importer, the actual task of collating and submitting data can be handled by the importer’s agent (such as a licensed customs broker or freight forwarder).

The ISF has to be filed electronically, comprising the following elements:

·        Seller

·        Buyer

·        Importer of record number / FTZ applicant identification number

·        Consignee number(s)

·        Manufacturer (or supplier)

·        Ship to party

·        Country of origin

·        Commodity Harmonized Tariff Schedule

Apart from the above, two additional data elements also need to be submitted at least 24 hours before the vessel’s arrival at a US port:

·        Container stuffing location

·        Consolidator

You may also add the customs entry.

Benefits of complying with ISF requirements

It is to the benefit of the importer and customs broker to comply with ISF requirements and other regulations related to the policy, as this can help with:

1) National security: Providing data in time enables the CBP to identify potentially dangerous shipments and detect contraband.

2) Fast customs clearance: Timely and accurate ISF submission helps expedite the customs clearance process.

3) Minimizing risks of penalties and delays: Adhering to ISF rules can help the importer avoid penalties and minimize delays in the customs clearance process. The CBP has the power to break bulk cargo upon suspicion. You don’t want that.

4) Reduced costs: With goods being cleared on time, the importer can avoid costs related to detention and demurrage, as well as commercial losses arising from delayed deliveries

5) Corporate reputation: A compliant organization will be perceived positively by both the public and government authorities. Non-compliant entities, on the other hand, could suffer loss of reputation

Penalties and consequences of ISF violations

Instances of violations of ISF stipulations are viewed with utmost seriousness. The CBP may levy penalties of $5,000 per violation in the case of inaccurate, incomplete, or untimely filing.

Best practices to follow

An importer or customs broker can adopt certain practices that have been proven to be effective in optimizing the ISF process, explained hereunder:

1) Proactive planning: Planning in advance to collect the requisite information and ensuring that it is submitted well in time can smoothen the ISF process

2) Employee training: Training employees on the criticality of ISF submissions will sensitize them to the importance of data accuracy and the implications of even inadvertent errors, thus enabling them to exercise due diligence and lowering the probability of human errors

3) Leverage technology: Use technological solutions and systems to transact customs business. Technology can be used for data compilation and submission of import and export documents to reduce manual effort and automate the submission process

Technology as an invaluable adjunct to the ISF process

While improving internal planning and training employees are quick wins for the importer and customs broker, going a step further and harnessing the recent advances in AI and ML can provide a significant competitive edge when it comes to ISF and other customs clearance tasks.

Importers and customs brokers increasingly invest in technology to automate the ISF, customs process, and other customs formalities.

One such sophisticated solution available in the market is KlearNow’s Customs Engine, targeted at importers, freight forwarders, and customs brokers.

Possessing the ability to process unstructured data backed by six years of deep learning from its patented AI and ML data ingestion tool, Customs Engine can digitize documentation and automate all tasks related to ISF, thus ensuring regulatory compliance and accurate submissions.

Click here to schedule a free demo of the capabilities and functionalities of Customs Engine.

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