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Compliance

Compliance. CBFCA seminar 18 October 2006. Contents. Compliance approach Types of audits Audit procedures Customs’ expectations at audit Recent compliance outcomes Customs cargo compliance program Sanctions Infringement Notice Scheme. Compliance approach. Regulatory philosophy

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Compliance

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  1. Compliance CBFCA seminar 18 October 2006

  2. Contents • Compliance approach • Types of audits • Audit procedures • Customs’ expectations at audit • Recent compliance outcomes • Customs cargo compliance program • Sanctions • Infringement Notice Scheme Compliance presentation - CBFCA seminar 18 October 2006

  3. Compliance approach • Regulatory philosophy • Informed self assessment – self regulation • Not yet fully compliant – assisted self-regulation • Resistant to compliance – directed regulation • Deliberate non-compliance – enforced regulation • Client segments • Carriers • Cargo handlers • Owners • Service Providers Compliance presentation - CBFCA seminar 18 October 2006

  4. NSW Compliance Teams • Directors – Doug Greaves and Jim Fleming • 1 – Owners – Peter Siomos • 2 – Owners– Bob Rangi • 3 – Declarations control – Stan Pragnell • 4 – Cargo Handlers & Carriers – Chris Ryan • 5 – Service Providers – Craig Aspinall • 6 – Cargo Intervention – Syd White Compliance presentation - CBFCA seminar 18 October 2006

  5. Types of audits • Audit – verification of >60 transactions • Benchmark audits • Focussed audits • Including desktop audits • Comprehensive audits • Including systems-based audits Compliance presentation - CBFCA seminar 18 October 2006

  6. Audit procedures • Initial contact • Entrance interview • Field work • Draft report • Exit interview Compliance presentation - CBFCA seminar 18 October 2006

  7. Customs Expectations at audit • Cooperation • Communication • Access to commercial documentation Compliance presentation - CBFCA seminar 18 October 2006

  8. Recent compliance outcomes • June/July – $2.3m – under bond goods • Underbond stock losses and undervaluation • October - $1.8m – misclassification • 3 importers - machinery parts, cars, clothing • June/Oct - $0.65m – GST exemptions • Code FOOD; Code 417 – goods returned unaltered Compliance presentation - CBFCA seminar 18 October 2006

  9. Recent compliance outcomes Compliance presentation - CBFCA seminar 18 October 2006

  10. Customs Cargo Compliance Program • Cargo Reporting • Free Trade Agreements • Exports • Revoked TCOs • Pearls – item 17 • Batteries – classification • Misclassification 8708 • Item 53 Compliance presentation - CBFCA seminar 18 October 2006

  11. Sanctions • Warnings • Detention of goods • Revenue demands • Tighter license provisions • Penalties Compliance presentation - CBFCA seminar 18 October 2006

  12. Infringement Notice Scheme • Presenter: Graeme Charlwood Compliance presentation - CBFCA seminar 18 October 2006

  13. Infringement Notice Scheme and Issuing of PENALTIES Graeme Charlwood Regional Manager Border Compliance & Enforcement Customs 18 October 2006

  14. Basis for the Scheme • Response to non-compliant activity is predicated on the Customs Regulatory Philosophy and the Customs Compliance Continuum • The Infringement Notice Scheme (INS) penalty regime is an important element in the overall compliance continuum strategy employed by Customs. It is a method of last resort when other efforts have not achieved compliant behaviour Compliance presentation - CBFCA seminar 18 October 2006

  15. Compliance presentation - CBFCA seminar 18 October 2006

  16. Background to the INS • The scheme has been subject to a phased approach: • 1 July 2002 s33, 113, 243T and 243U of the Customs Act were introduced • 6 October 2004 – export related offences became subject to the INS • 19 July 2005 – import/cargo reporting related offences became subject to the INS • April 2006 – late reporting offences Compliance presentation - CBFCA seminar 18 October 2006

  17. Where the INS fits within the penalty regime • Three level penalty regime • Level 1 – fault based, prosecution only, relatively high penalty • Level 2 – strict liability, prosecution only, lower level penalty compared to level 1 • Level 3 – strict liability subject to scheme, infringement notice in lieu of prosecution or prosecution, same kind of penalties as level 2 Compliance presentation - CBFCA seminar 18 October 2006

  18. What is meant by strict liability? • The general rule is that an offence consists of physical elements and fault elements BUT • If specified in an Act, an offence can be one of “strict liability” • Strict liability means that for a person to commit the offence, only the physical elements of the offence need to be proven Compliance presentation - CBFCA seminar 18 October 2006

  19. Exceptions & Defences can apply • Guidelines must be considered by a delegate when exercising powers relating to the INS, the Guidelines are however, a guide only • The Delegate is required to take into account any exceptions or defences when considering issuing an Infringement Notice Compliance presentation - CBFCA seminar 18 October 2006

  20. Exceptions and Defences - what are they? Exemptions: • Voluntary Disclosure of a false or misleading statement (specified criteria/circumstances apply) • USFTA s243T & U false statement corrected & any short payment made good • Amberline s243T false statement where uncertainty was identified at time of statement • Due Diligence s33(3) employer has taken reasonable steps to prevent the action • Statutory Moratorium for late cargo reports s64AB • Mistaken Facts (applicable all offences) Defences: • Criminal Code defences (applicable to all offences) • Circumstances involving mistake or ignorance (ie mistaken fact) • Circumstances involving external factors (ie Duress; Intervening conduct or event; sudden or extraordinary emergency) Compliance presentation - CBFCA seminar 18 October 2006

  21. Key Features of the Infringement Notice Scheme • Administrative option instead of prosecution in the first instance • The legislative basis for the scheme is in Division 5 of Part XIII of the Customs Act • Sections of the Act subject to the scheme are listed here • The penalty that applies is generally 20% the maximum amount a court could impose Compliance presentation - CBFCA seminar 18 October 2006

  22. Proposals to The Delegate • The delegate for INS in NSW is Regional Manager or Regional Director level, who has to confirm that the elements of the specific offence have been met • The delegate has a range of options available under the scheme. These include: Prosecution/Issue an Infringement notice/Issue a warning letter/Closer Monitoring/Audit/ Education or No further Action Compliance presentation - CBFCA seminar 18 October 2006

  23. Offences • Offences are listed in the handout provided Compliance presentation - CBFCA seminar 18 October 2006

  24. Key Features of the Infringement Notice Scheme • Generally, an infringement notice may be served up to 12 months from the date of the offence EXCEPT • If the infringement notice is for an offence against section 243T or 243U detected as a result of the exercise of monitoring powers, the earlier of: • 12 months from detection of the offence; or • Up to 4 years after the statement was made Compliance presentation - CBFCA seminar 18 October 2006

  25. Key Features of the Infringement Notice Scheme • When an infringement notice is served on a person, the person has 3 options: • Pay • Seek withdrawal/extension of time for payment • Not Pay, consequences being prosecution action automatically instituted by Customs. • Note any request for withdrawal of a notice is reviewed by a Customs Central Office delegate Compliance presentation - CBFCA seminar 18 October 2006

  26. NSW REGIONAL DIRECTOR • GAIL BATMAN Compliance presentation - CBFCA seminar 18 October 2006

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