November 6, 2026
Dear Members,
CBP plans to soon an interim final rule fundamentally changing how brokers must handle foreign and a number of domestic clients. A summary of the key points is set forth below. In short, if your brokerage files entries for any importer that is not a U.S. citizen, lawful permanent resident, or U.S.-controlled entity, these rules creates new verification requirements, new filing restrictions, and most importantly expanded penalty exposure under 19 U.S.C. § 1592. CBP is accepting comments but the rule’s general effective date is 60 days after publication (roughly January 5, 2027 assuming the scheduled November 6, 2026 publication date holds).
Please feel free to contact me or Bill Shayne if you have any questions or concerns.
- Requires “foreign” importers of record to either (a) become C-TPAT validated themselves or (b) make entry using a C-TPAT validated customs broker.
- NOTE: As of today, CBP does not permit foreign entities (other than those from Canada) to apply for C-TPAT; therefore, until CBP changes this policy, foreign importers must utilize a C-TPAT validated broker.
- NOTE: There will be further changes to the import process for foreign importers. The June 3rd Executive Oder underlying this rule change also requires CBP to issue guidance stating that a foreign importer of record, “…may not rely on a continuous bond to meet the bond requirements for entry, except as permitted by CBP when the foreign IOR has demonstrated that the revenue would be fully protected and that compliance with the laws, regulations, and instructions enforced by CBP would be assured…”
- Defines a “foreign” importer of record as follows:
- Regarding a person, a person that is NOT a U.S. citizen or lawful permanent resident
- Regarding an entity, a person NOT meeting the following criteria: (a) located in the United States, (b) organized under the laws of the United States and (c) not owned 51 percent or more by a U.S. citizen or lawful permanent resident or without a direct ownership of a significant unencumbered real property.
- NOTE: CBP did not define what qualifies as “significant” unencumbered real estate.
- Importers claiming to be a U.S. importer of record must affirmatively make that declaration upon entry. CBP expects brokers to verify these claims and maintain corresponding records. In this regard, the new regulations state:
Each broker must request and review a client’s records to determine that the criteria to be considered a U.S. importer of record as specified in § 110.2 of this chapter, are satisfied. Such records may include, but are not limited to, proof of citizenship or lawful permanent residence, corporate charters, financial statements and records, purchase receipts, or documents of title.
- DELAYED COMPLIANCE: CBP will accept requests for individual brokers to delay compliance with these verification procedures. Requests must include an explanation why delayed compliance is necessary and must be approved by CBP (the delay, if approved, will last no later than May 6, 2027). Certain brokers will be ineligible for this extension; specifically, brokers currently facing CTPAT removal, Form 5106 suspension, federal debarment, entry filer code suspension, or broker license revocation proceedings. Request for delayed compliance must be received within 60 days from publication of the Interim Final Rule.
- Records of this verification must be kept for five years from the date of verification.
- CBP intends to verify importer claims of being a U.S. importer of record. CBP will analyze several factors when determining whether an entity is “located” in the United States including place of principal business, paying U.S. employees, operating retail locations, owning domestic assets, etc. The purpose of these verifications is to confirm that the importer has a significant presence in the United States and is not “instrumentality of a foreign manufacturer without a substantial presence in the United States.”
- CBP will now requires brokers who enter merchandise as the importer in their own name need to obtain a power of attorney from the “real” U.S. importer or foreign importer. If a broker files as importer on behalf of a foreign principal who is not the “owner or purchaser” of the merchandise, it must identify that principal with a CBP Form 5106 on file and reference their IOR number on the entry.
- The new regulation also amends CBP policy regarding penalties. Previously, if a broker committed an ordinary negligent or grossly negligent §1592 violation without sharing in benefits beyond customary brokerage fees, CBP could only pursue Section 1641 broker monetary penalties, or potential license suspension or revocation. CBP now has discretion to pursue §1592 penalties, §1641 remedies, or both, for the same conduct.
