In 2017, the Auditor General of Canada criticized the Canada Border Service Agency’s Administrative Monetary Penalty System (AMPS) for being too low to encourage trade compliance. As a result, a number of penalties have increased as of April 1st, 2019. This is a good opportunity to look at what AMPS are and how to avoid penalties on import shipments.
CBSA AMPS penalties were first issued in October of 2002 against commercial imports. The penalties were a result of issues found, either when inspecting shipments, or after an audit of company records. The penalty system was created to level the playing field for all businesses involved in the trade of international goods by correcting non-compliance. CBSA issues monetary fines to clients that violate Canadian trade and border legislation.
There are many instances where AMPS may be issued. Some examples include failure to pay taxes or report goods to the CBSA, movement of goods without CBSA approval, and maintaining proper record keeping. The full list is called the Master Penalty Document and can be found here. Penalties can be issued against anyone involved in the supply chain including importers, exporters, brokers, warehouse operators, carriers, or freight forwarders.
If an audit occurs and an officer determines you are in contravention, they will issue a Notice of Penalty Assessment (NPA). This will describe the infraction and the penalty it incurs. The NPA details the issue, the penalty code and amount, the client information, the reason for the penalty, how and where to pay as well as the deadline for payment, and the address of the Customs office that issued the penalty.
If you do not agree with the penalty, you do have the option to appeal the assessment. An appeal must be made within 90 days of the date of the notice. In some cases the Customs Act allows an extension, however it is best to appeal within the 90 days. CBSA has made it simple to appeal the NPA by creating an online form which can be found here. The file will be reviewed by a Recourse Directorate official who will investigate and ensure the penalty was properly applied and will make their decision. If you disagree with that opinion, the next step would be an appeal to the Federal Court of Canada.
The best way to avoid AMPS is to simply avoid doing things that result in penalties. CBSA can go back 6 years to assess penalties against infractions. Some penalties are issued against each occurrence of the infraction. It is very easy for the size of the penalties to increase dramatically. So don’t undervalue your goods, don’t mis-declare items, and contact a brokers like Orbit Brokers who doesn’t encourage this kind of action.