Author Archives: nbmooney

About nbmooney

The Mooney Law Firm grew from years of practical experience in international trade, freight and logistics. Its founder, Neil Mooney, owned and operated one of the most successful customs brokerages, freight forwarders and non-vessel operating common carriers in Miami, Florida for 14 years prior to becoming a member of the bar. Over the years, the firm’s practice has grown, and it represents multinational corporations as well as individual clients. To us, there is no “typical client.” We understand that clients in need of trade counsel have unique legal and business objectives that require specialized service. We work directly with our clients at every stage, explaining both the law and our legal services in a straightforward manner. We represent clients on federal administrative matters such as those concerning the regulations of Customs and Border Protection, the Food and Drug Administration, the Federal Maritime Commission and export controls regardless of which port of entry is concerned or where the client is physically located. Our years of experience have resulted in our having close ties to reputable attorneys in affiliated law firms overseas in many countries such as China, Brazil and Mexico. If you have a legal issue or question concerning foreign law, but do not know where to turn, we can help.

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Thank you.

– The Mooney Law Firm, LLC

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Rail and Ocean Carriers: Transition to the ACE e-Manifest

Customs recently published an important reminder for all rail and sea carriers regarding the impending transition from the Automated Manifest System (AMS) to the Automated Commercial Environment (ACE) e-Manifest system.  As you’re probably aware, ACE is the gradual consolidation and automation of Customs’ current border processing systems, which is being implemented through the constantly-improving ACE Secure Data Portal.  In August of last year, Customs updated the e-Manifest system, previously used only for the processing of truck cargo, to be an alternative to the AMS for rail and sea carriers as well.  The latest planned shift, scheduled to occur on September 29, 2012, marks yet another step towards consolidation by eradicating the AMS entirely.  So if your company hasn’t yet started to transition to the new e-Manifest system, it is advisable that you heed the advice contained within this Customs bulletin (reproduced below) and contact your software provider as soon as possible.[1]

——————————————–

Are you ready for ACE e-Manifest: Rail and Sea (M1)?

The 60 day countdown has begun!

 In less than 60 days, effective September 29, 2012, ACE will be the only approved EDI for transmitting required advance rail and sea cargo information and ABI in-bond transactions to CBP.

As of July 31, 2012, 96% of ocean carriers and 83% of ABI software developers impacted by the transition to M1 have either completed or are in the onboarding process. All rail carriers are either in production or currently testing.

** If you are part of the 4% of the ocean carriers or the 17% of the ABI software developers who are NOT yet testing ACE Rail and Sea Manifest, NOW is the time to contact your Client Representative for assistance.**

CBP is finding that many software developers have misinterpreted sections of the Implementation Guidelines that have resulted in programming changes to trade software. If you have not been in touch with your Client Representative to begin certification testing, please do so immediately!

If you submit sea or rail cargo information, file ABI in-bond transactions, or receive broker download information via ABI, you or your software provider must transition to ACE, or your transactions will fail when the current Automated Manifest System (AMS) for rail and sea is decommissioned.

In order to ensure that EDI messages for rail and sea manifest and ABI in-bond transactions do not fail, it is essential that by September 29, 2012:

  1. The required programming changes are completed,
  2. Certification testing is completed in coordination with your Client Rep, AND
  3. The switch to production for ACE e-Manifest: Rail and Sea is made.

For additional information, please refer to the recently-conducted webinar available on CBP.gov at

https://connect.hsin.gov/p67194661/?launcher=false&fcsContent=true&pbMode=normal. 

Further information on ACE e-Manifest: Rail and Sea is available at

http://www.cbp.gov/xp/cgov/trade/automated/modernization/manifest_railsea/.

As of July 29, only 60 days remain to complete all of the steps necessary to make the transition to ACE rail and sea manifest filing.”[2]

 

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Wholesalers To Colombia Beware: Your Business Could Be Part Of An International Money-Laundering Scheme

The Black Market Peso Exchange (BMPE) is a long lived and widely used method for converting Colombian pesos into US dollars and vice versa.  Boasting the ability to exchange money at a much lower rate, the BMPE evolved from the black market exchange that existed in Colombia for decades and was used by legitimate businessmen and drug dealers alike for the singular purpose of saving money.  The BMPE is now one of the most sophisticated (and common) money laundering schemes employed by the cartels in the Colombian drug trade.  Raymond Kelly, former Commissioner of the US Customs Service calls it the “ultimate nexus between crime and commerce, using global trade to mask global money laundering.”

 

Here is a brief outline of how it works (though there are multiple variations of this basic model):

 

  1. Colombian traffickers or their US counterparts contact a ‘Black Market Peso Broker’ (money brokers who purchase US dollars that are derived from street drug sales) to negotiate an exchange rate.  The rate is often approximately 40% less than the official rate.

 

  1. Once the rate is agreed upon, the drug dealers deliver the cash to the Broker’s US office or some other agreed upon location for the exchange.  At this point, all risk for movement of the money from the US to Colombia falls onto the Broker.  Should anything go wrong, e.g. the money is seized, the drug dealers and traffickers look to the Broker for repayment.

 

  1. The Broker then processes the cash by employing runners to deposit the cash into US banks throughout the nation in increments of less than $10,000.00 to avoid the bank’s reporting requirements under the US Currency and Foreign Transactions Reporting Act, 31 U.S.C. §5311-5355.

 

  1. Simultaneously, the Broker’s Colombian office exchanges pesos (also at a lower rate than the official rate) with legitimate Colombian businesses who are looking for cheaper US dollars, which will enable them to do more business with legitimate US exporters.

 

  1.  Once the legitimate Colombian businesses give the Broker their pesos, the Broker then pays the business’s debts in the US via wire transfer or direct deposit, allowing for the facilitation of legitimate international trade.  The pesos in turn go back to the drug dealers and traffickers to spend in Colombia.

Part of what makes this scheme so attractive to the drug cartels is that the transactions in step (5) above appear like ordinary international trade transactions so the authorities are far less likely to investigate them (if at all), even though the payments are made by unrelated third parties.  As a result, many U.S. businesses (large and small)[1] are completely unaware that they actually have a role in the illicit drug trade.

 

Unfortunately, it seems very difficult for U.S. enforcement officials to sympathize with the businesses involved. In a classic case of the public and private sectors failing to understand each other, the United States cannot see how businesses could possibly participate in such a system unwittingly.  In many cases where this scheme is uncovered, entire U.S. bank accounts are seized and forfeited based on the assertion that the owners must have been aware that the money was dirty.  In some cases money is seized before it is even proven to be of illicit origins!

 

Here are two warning signs that your business may be inadvertently participating in this sophisticated money-laundering scheme:

  • You ship goods to Colombian clients, but the goods are paid for by a separate entity in a different country
  • You receive payment in multiple small amounts
  • You receive payment through third party checks
  • You receive this payment in lump-sum wire transfers, with the balance to be credited towards future purchases

 

Although there is every possibility that a buyer with the above warning signs may be perfectly legitimate, it may not be worth the risk that their money isn’t as legitimate.  Your hard-earned money could be seized and you don’t want that, because once the United States has seized your assets, it’s a long, hard road to getting them back, if you ever do.


[1] Hewlett Packard, Ford, Sony, General Motors, Whirlpool, General Electric are all entities that have been inadvertently involved in the BMPE and have taken steps to correct their involvement.

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CBP Recordkeeping Requirements: UPDATE!

A long-overdue modification of CBP’s recordkeeping requirements has been announced this week, with an anticipated effective date of January 11, 2013.  Current regulations require that all records are to be kept “within the broker district that covers the Customs port to which they relate,” a requirement which severely complicates the recordkeeping process for many companies. The new regulations will eliminate this requirement, allowing any licensed customs broker “to store records relating to his or her customs transactions at any locations within the customs territory of the United States.” CBP has also included plans, effective on the same date, to provide exemptions from the 120-day requirement for customs brokers not serving as the importer of record to retain certain records in their original format. These exemptions will clear the way for companies to embrace the less burdensome and more environmentally friendly methods of electronic recordkeeping.

These policy changes were proposed by CBP as early as March of 2010, prompting discussion and commentary on the issue. After assessing that the response to the proposed changes was largely positive, and correcting a few minor errors noticed by the commentators, Customs has finally set a date by when the changes will be implemented. The altered language of 19 CFR parts 111 and 163 will read as follows:

PART 111 – CUSTOMS BROKERS
* * * * *
§ 111.23  Retention of records.
(a) Place of retention.  A licensed customs broker may retain records relating to its customs transactions at any location within the customs territory of the United States  in accordance with the provisions of this part and part 163 of this chapter.  Upon request by CBP to examine records, the designated recordkeeping contact identified in the broker’s applicable permit application, in accordance with § 111.19(b)(6) of this chapter, must make all records available to CBP within 30 calendar days, or such longer time as specified by CBP, at the broker district that covers the CBP port to which the records relate.
(b)  Period of retention.  The records described in this section, other than powers of attorney, must be retained for at least 5 years after the date of entry.  Powers of attorney must be retained until revoked, and revoked powers of attorney and letters of revocation must be retained for 5 years after the date of revocation or for 5 years after the date the client ceases to be an “active client” as defined in § 111.29(b)(2)(ii), whichever period is later.  When merchandise is withdrawn from a bonded warehouse, records relating to the withdrawal must be retained for 5 years from the date of withdrawal of the last merchandise withdrawn under the entry.
PART 163 — RECORDKEEPING   
The revisions read as follows:
§ 163.5  Methods for storage of records.
* * * * *
(b) * * *
(2) * * *
(iii)  Except in the case of packing lists (see § 163.4(b)(2)), entry records must be maintained by the importer in their original formats for a period of 120 calendar days from the end of the release or conditional release period, whichever is later, or, if a demand for return to CBP custody has been issued, for a period of 120 calendar days either from the date the goods are redelivered or from the date specified in the demand as the latest redelivery date if redelivery has not taken place.  Customs brokers who are not serving as the importer of record and who maintain separate electronic records are exempted from this requirement.  This exemption does not apply to any document that is required by law to be maintained as a paper record.
* * * * *
(5)  Failure to comply with alternative storage requirements.  If a person listed in § 163.2 uses an alternative storage method for records that is not in compliance with the conditions and requirements of this section, CBP may issue a written notice informing the person of the facts giving rise to the notice and directing that the alternative storage method must be discontinued in 30 calendar days unless the person provides written notice to the issuing CBP office within that time period that explains, to CBP’s satisfaction, how compliance has been achieved.  Failure to timely respond to CBP will result in CBP requiring discontinuance of the alternative storage method until a written statement explaining how compliance has been achieved has been received and accepted by CBP.

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FMC Simplifies Negotiated Rate Arrangements

The Federal Maritime Commission revised its Negotiated Rate Arrangement (NRA) regulations to reduce recordkeeping requirements.   With immediate effect, the FMC is

a) eliminating the requirement for the shipper’s title and address in their written assent to rates,

b) eliminating the requirement that the bill of lading include a notice that a shipment is moving pursuant to an NRA; and

c) eliminating the requirement that an NVOCC retain all associated records and written communications pertaining to an NRA. List of Subjects in 46 CFR Part 532

 

Accordingly, the Federal Maritime Commission amends 46 CFR Part 532 as follows:

PART 532 – NVOCC NEGOTIATED RATE ARRANGEMENTS

  1. The authority citation for Part 532 continues to read as follows:

AUTHORITY: 46 U.S.C. 40103.

  1. In § 532.5, revise paragraph (b) to read as follows:

§ 532.5 Requirements for NVOCC negotiated rate agreements.

* * * * *

(b) Contain the names of the parties and the names of the representatives agreeing to the NRA;

* * * * *

  1. Revise § 532.6 to read as follows:

§ 532.6 Notices.

An NVOCC wishing to invoke an exemption pursuant to this part must indicate that intention to the Commission and the public by a prominent notice in its rules tariff.

4. Revise § 532.7 to read as follows:

§ 532.7 Recordkeeping and audit.

(a)        An NVOCC invoking an exemption pursuant to this part must maintain original NRAs in an organized, readily accessible or retrievable manner for 5 years from the completion date of performance of the NRA by an NVOCC, in a format easily produced to the Commission.

(b)        NRAs are subject to inspection and reproduction requests under § 515.31(g) of this chapter. An NVOCC shall produce the requested NRAs promptly in response to a Commission request. All records produced must be in English or be accompanied by a certified English translation.

(c)        Failure to keep or timely produce original NRAs will disqualify an NVOCC from the operation of the exemption provided pursuant to this part, regardless of whether it has been invoked by notice as set forth above, and may result in a Commission finding of a violation of 46 U.S.C. 41104(1), 41104(2)(A) or other acts prohibited by the Shipping Act.

* * * * *

For more information on NRA’s you can contact us via email at nmooney@customscourt.com or smorrison@customscourt.com or by phone at (850) 893-0670 or toll free at (800) 583-0250.

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When Is C-TPAT Right For You?

The Customs-Trade Partnership Against Terrorism (C-TPAT) was established to ensure the safety and security of cargo arriving in the United States. Although being C-TPAT certified is not required by any governmental agency, many private companies only partner with C-TPAT compliant businesses. Thus, Third Party Logistics Providers (3PLs) are strongly motivated to obtain certification.

However, in order for a 3PL to be eligible for C-TPAT certification it must meet some minimum requirements. For example, it MUST do all of the following:

1. Be directly involved in the handling and management of the cargo from point of stuffing overseas up to the first U.S. port of arrival. (Entities which only provide domestic services and are not engaged in cross border activities are not eligible.)

2. Manage and execute these particular logistics functions using its own transportation, consolidation and/or warehousing assets and resources.

3. Be licensed and/or bonded by one of the following: the Federal Maritime Commission, the Transportation Security Administration, U.S. Customs and Border Protection, or the Department of Transportation, and

4. Maintain a staffed office within the United States.

And in order to participate in the C-TPAT program a 3PL may NOT:

1. Subcontract any service beyond a second party other than to other CTPAT members (This means that CBP does not allow the practice of “double brokering”, the 3PL may contract with a service provider, but it may not allow that contractor to further subcontract the actual provision of this service to an unknown third party).

2. Be a non asset-based 3PL which only performs duties such as quoting, booking, routing, and auditing (these type of 3PL may possess only desks, computers, and freight industry expertise) without its own warehousing facilities, vehicles, aircraft, or any other transportation assets. These non-asset based entities are excluded from C-TPAT as they are unable to enhance supply chain security throughout the international supply chain.

If your business is not otherwise eligible for C-TPAT certification but desires to obtain it, it might consider obtaining one of the necessary agency licenses. If you have questions on doing so, we are able to help.

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A Proper Receipt Creates A Warehouse Lien

We are constantly being asked by NVOCCs, forwarders and warehousemen whether they have a legitimate lien on the cargo in their possession, such that that they can hold the freight until being paid.  The answers are not simple: you only have a lien on freight if it was  a)given to you by the cargo owner; or b) given to you by statute.  

Warehousemen have a statutory lien, which is generally the same throughout the country under the Uniform Commercial Code.  We will discuss Florida’s implementation of the UCC provision.  This is a simple outline of how to make certain that your warehouse receipt is compliant with Florida Statutes, and thus obtains for a warehouseman the full privileges the law can provide. Following the guidelines below should ensure that you obtain the full statutory warehouseman’s lien.

The general form that a warehouse receipt takes is in accordance with the following (Florida Statutes 677.202):

(1) A warehouse receipt need not be in any particular form.

(2) Unless a warehouse receipt embodies within its written or printed terms each of the following, the warehouseman is liable for damages caused by the omission to a person injured thereby (i.e., if you fail to include the following, you can be subject to loss of lien rights):

(a) The location of the warehouse where the goods are stored;

(b) The date of issue of the receipt;

(c) The consecutive number of the receipt;

(d) A statement whether the goods received will be delivered to the bearer, to a specified person, or to a specified person or his or her order;

(e) The rate of storage and handling charges, except that where goods are stored under a field warehousing arrangement a statement of that fact is sufficient on a nonnegotiable receipt;

(f) A description of the goods or of the packages containing them;

(g) The signature of the warehouseman, which may be made by his or her authorized agent;

(h) If the receipt is issued for goods of which the warehouseman is owner, either solely or jointly or in common with others, the fact of such ownership; and

(i) A statement of the amount of advances made and of liabilities incurred for which the warehouseman claims a lien or security interest (Florida Statutes 677.209). If the precise amount of such advances made or of such liabilities incurred is, at the time of the issue of the receipt, unknown to the warehouseman or to his or her agent who issues it, a statement of the fact that advances have been made or liabilities incurred and the purpose thereof is sufficient.

-For the purposes of this section, you will want to include a statement saying that you retain a lien on all goods stored by you for the bailor (customer), regardless of whether or not they are those goods listed on this particular warehouse receipt.

In addition to the above listed provisions, it is advisable that you include a provision that advises your customers that they have the option to purchase additional insurance or to obtain insurance through a provider of their own choice.   Note that nothing in the above addresses limitation of liability, an entirely different topic.

For more information on this topic please contact our offices at 800-583-0250.

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