What Constitutes Customs Fraud
Fraud is defined as an intentional perversion of the truth to induce another individual into believing or doing something that they would not otherwise do. Fraud is an intentional crime.
How Fraud is Detected
Customs officials may discover that fraud has occurred by several different methods. Fraud may be discovered by:
- failure of a sample of goods to conform to the description on the invoice
Tools for Determining Fraud
- Document Demand
Customs officials may demand documents showing that the goods are what they are purported to be. The document demand is typically the first formal request in the investigation process. The importer may refuse to surrender the documents. However, the importer may also be compelled by a court to surrender the requested documents at a later date.
After the commencement of a fraud investigation, the customs officials may issue a pre-penalty demand alleging that fraud has occurred. Customs officials may demand the full forfeiture value of the importer’s goods. If the importer refuses to surrender documents, the customs officials may consider the refusal when determining the proper penalty to be assessed in the case if fraud is discovered.
- Administrative Summons
The customs officials may also seek an administrative summons if they suspect fraud. The summons may compel the importer to produce certain documentation to support its assertion that the goods are what the importer claims that they are. The summons may prohibit the entry of the goods until the importer complies with the requirements set forth in the summons.
- Classification and Valuation of the Goods
If the importer fails to provide proper documentation about the goods sought to be imported into the United States it is within the customs officials’ purview to determine the proper classification for the goods and assess a tariff rate accordingly. If the importer disagrees with the classification, the importer may challenge the tariff assessed and provide the necessary documentation to support its claim.
If, after an investigation, the importer is found to have committed fraud, her or she may be assessed a monetary penalty, the goods may be subject to forfeiture, or the importer may lose importation privileges. Criminal penalties may be also be imposed, depending upon the degree of fraud and whether illegal cargo was involved.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.