U.S. Customs and Border Protection (CBP) encourages proactive import compliance, including the submission of Prior Disclosures (PDs) by parties who believe they may have violated customs laws under 19 U.S.C. § 1592.

All parties involved in the importation of merchandise into the US, such as importers, customs brokers, exporters, shippers, and foreign suppliers and manufacturers can file a PD with CBP to proactively disclose certain false statements, acts, or omissions in violation of 19 U.S.C. § 1592. By doing so, these parties may benefit from reduced penalties as a result of the PD filing. Read more about CBP’s enforcement authority and the duties of importers here.

Submitting a PD

A PD is often submitted in two parts: a “blanket” initial PD submission, and a “perfected” PD.

Pursuant to 19 C.F.R.§ 162.74(b), the initial submission should do all the following:

• Identify the class or kind of merchandise involved in the violation
• Identify the importation or drawback claim included in the disclosure by entry number, drawback claim number, or by indicating each concerned customs port of entry and the approximate dates of entry or dates of drawback claims
• Specify the material false statements, omissions or acts including an explanation as to how and when they occurred
• Set forth, to the best of your knowledge, the true and accurate information or data that should have been provided in the entry or drawback claim documents

If you require additional time to gather information, you should state in your initial PD that you will require time to perfect your PD. According to 19 CFR 162.74(b)(4), you have 30 days to gather this information.

A perfected PD must include all the following:

• The class or kind of merchandise involved in the violation
• The importation or drawback claim included in the disclosure by entry number, drawback claim number, or by indicating each concerned customs port of entry and the approximate dates of entry or dates of drawback claims, if applicable
• The material false statements, omissions, or acts including an explanation as to how and when they occurred
• To the best of your knowledge, the true and accurate information or data that should have been provided in the entry or drawback claim documents

Updated CBP Prior Disclosure Policies

On Nov. 17, 2021, CBP issued Directive No. 5350-020A, titled “Processing Prior Disclosure Submissions.” The new directive shortens the amount of time available for PD filers to perfect their disclosure. Previously, from our firm’s personal experience, CBP routinely granted requests for 180 days to perfect a prior disclosure. However, CBP has now significantly shortened extension period to an initial 30-day extension with only one additional 60-day extension granted by FP&F.

Due to the potentially large amount of work needed to perfect a PD, this shortened time to perfect makes the PD process more onerous for importers seeking to proactively disclose their suspected violations. Even worse, the limitation of time to perfect a disclosure opens up the possibility that an importer may disclose a violation to CBP, not have the opportunity to perfect the disclosure, and lose the benefits of the PD protection, allowing CBP the ability to penalize the importer.

A Valid PD Doesn’t Preclude Criminal Liability

If you submit a PD containing information which gives CBP reason to believe that a criminal violation has occurred, CBP, ICE, or HSI may refer that information to the Department of Justice (DOJ). Specifically, the matter will likely be referred to the appropriate U.S. Attorney’s office responsible for making a decision as to whether to prosecute the alleged criminal violation.

Contact a Customs Expert Before Filing a PD

A PD is an invaluable tool for importers seeking to proactively comply with CBP import requirements. Filing a legally compliant and ultimately accepted PD will substantially reduce any civil penalties and will additionally reduce the likelihood of criminal enforcement.
Nevertheless, the PD process can be involved and detail oriented. It is important for importers to seek appropriate legal counsel and meticulously work through the PD process to obtain the best results. Want expert training on this topic? Check our our on-demand webinar here.

Learn more about the PD process:

• Bloomberg: Submitting a Prior Disclosure to CBP – Customs & International Trade Law Firm (diaztradelaw.com)
• International Trade Today: CBP Policy Change Makes Extensions for Prior Disclosures More Difficult – Customs & International Trade Law Firm (diaztradelaw.com)
• CBP’s New Prior-Disclosure Requirements
• Requests for Information (CBP Form 28) and Prior Disclosures