CUSTOMER RED FLAGS
With international flights to Australia still limited, there will continue to be more drug, tobacco and other prohibited imports hidden in cargo. The importation of these goods will likely involve an innocent customs broker.
The challenge for customs brokers is that they do not have the opportunity to inspect goods and as a result, make declarations to customs authorities based genuinely on the documents provided by the customer. At the same time, under Australian law, customs brokers are potentially liable for any underpaid duty as if they are the owner of the goods.
When it comes to prohibited imports there is no strong theme as to what import will have been falsely described. Tobacco, for instance, has been falsely described as, or imported with, paper cups, curtains, hessian bags, table tops, tiles, incense, carpet, glass bottles, car seat covers, rubbish bins and air fresheners. While there is no consistent theme, it is generally the case that tobacco has not been labelled as commodities, food stuffs, machines, electrical goods or particularly high value items.
Given that there are not strong warning signs from the country of origin or goods description, we recommend that brokers be alert to these other red flags:
the importer calls you out of the blue without a named referral;
the importer states that their business is importing goods but will not tell you the name of their previous customs broker or why they are changing customs broker;
the goods being imported do not match the business of the importer – in one example the tobacco was described as car seat covers. Only specific businesses need a container load of car seat covers;
the volume of the goods seems odd – for instance, if the importer states that a container of curtains are for their personal use;
the importer is not providing an ABN to import what are usually commercial goods;
the customer can only provide pro-forma invoices;
the importer is reluctant to provide proof of payment;
the client is reluctant to confirm verbal details in writing;
the client is unable to provide photographs or other illustrative descriptive material regarding the goods;
does the client say a document exists, but fails to provide that document;
does the client seem overly keen to collect goods from the port and deliver them to the warehouse;
the importer is prepared to pay extra for a low document or quick import;
the importer wishes to pay cash for a transaction that would usually be paid electronically or by credit;
the importer is requesting a specific tariff classification or goods description where there is no commercial reason for the request;
the delivery route seems odd when taking into account the claimed country of origin;
the importer is demanding delivery times that do not seem motivated by commercial needs;
the value of the goods seems less than the freight costs;
the importer is not interested in taking legitimate steps to reduce customs duty payable (such as obtaining a tariff concession order);
the insurance on the goods does not reflect the value of the goods;
the documentation does not look professional or contains basic errors;
the details of the importer cannot be verified;
you can only contact the importer by way of a generic email address;
the goods description in either the commercial invoice or other documents is vague;
there is no certificate of origin in circumstances where you would expect one, or
the importer does not seem familiar with, or is not interested, specific requirements that apply to the goods as described (such as labelling or quarantine restrictions for certain goods).
Naturally, any one of these items in isolation would not be suggestive of the customer seeking to smuggle prohibited imports. Often it is the aggregation of minor issues that adds up to a major concern. You know your customers and will have the best sense of whether something seems odd. You should not be afraid to seek an explanation of something that seems unusual.
Where false information is provided, there is the defence of reasonable mistake of fact. However, to rely on the defence of reasonable mistake of fact, companies need to undertake reasonable due diligence. This means that you cannot turn a blind eye to red flags.
You may be concerned about losing a customer. Genuine importers are unlikely to be worried by basic questions regarding the import. Smugglers, on the other hand, may get cold feet and abandon your services. Even some basic due diligence may be all it takes to send a criminal away from your business to one that asks no questions.
You will not be missing out. Our experience is that smugglers will generally only use a broker a few times and the cost of that broker dealing with an Australian Border Force or an Australian Federal Police investigation far outweigh the profit on the transaction.
Innocent customs brokers may not ultimately be fined, but there is still the cost of dealing with subpoenas and attending police interviews.
Please feel free to contact us if you have concerns regarding a transaction or would like assistance implementing compliance procedures.