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Audits

& Penalties. Audits. Monitoring Powers - why we have a system using retrospective analysis industry pressure ACS incapacity to effectively check all imports Trade-offs? Post-entry audit Requirement to retain documents. Audits & Penalties.

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Audits

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  1. & Penalties Audits

  2. Monitoring Powers - why we have a system using retrospective analysis industry pressure ACS incapacity to effectively check all imports Trade-offs? Post-entry audit Requirement to retain documents Audits & Penalties

  3. Monitoring Powers and other Compliance Obligations Export Examination Powers Penalties & Strict Liability Infringement Notices & Guidelines Document and Record Retention Audits & Penalties

  4. Cargo Management Re-Engineering Based on the Kyoto Convention on Customs procedures New way for the ACS to aid Trade and augment compliance and Border Security Implemented by “Trade Modernisation” Legislation Improving and modernising the management of cargo in and out of Australia Background

  5. Methods of improvement Legal foundation for an electronic business environment for cargo management Establish new “compliance management” “one size not fill all” Improving control over cargo and movement where fail to observe regulatory requirements Elements to CMR - IT changes, reporting obligations, audit powers and new penalties Background

  6. IT Systems New IT Systems to replace COMPILE, EXIT, SCA, ACA Integrated Cargo System (ICS) and Customs Connect Facility (CCF) Web-based reporting system into “Customs Central” Migration to new IT for Exports ( Feb/March 2004) and Imports (July? 2004) Obligations to report all movements of cargo in/out Australia and within Australia

  7. Monitoring Powers and other Compliance Obligations

  8. Monitoring Powers & other Compliance Obligations Purpose of Monitoring Powers • To assess whether someone is complying with Customs-related law; or • whether a person’s record-keeping, accounting or computing or operating systems accurately record and generate information to enable compliance with a Customs-related law; or • the correctness of information communicated to Customs

  9. Monitoring Powers & other Compliance Obligations What is ‘Customs-related law’? • ‘Customs-related law’ means : • the Customs Act and its regulations • the Excise Act 1901 and its regulations • any other Act or regulations that relate to: the importation or exportation of goods, • where the importation or exportation is subject to: • compliance with any condition or restriction, or • is subject to any tax, duty, levy or charge Section 4B

  10. Monitoring Powers & other Compliance Obligations What are the monitoring powers? The monitoring powers include the power to: • search anypremises(not just of importer/exporter) • take photographs (including video recording) or make sketches, of premises or anything at premises • inspect, examine, count, measure, weigh, gauge, test or analyse, and take samples of, anything in or on premises • inspect any document or record in or on premises • take extracts from, or make copies of, any document or record in or on premises Section 214AB

  11. Monitoring Powers & other Compliance Obligations What are the monitoring powers? The monitoring powers include the power to: • take into or onto premises any equipment or material reasonably necessary for the purpose of exercising the above powers • test and operate record-keeping, accounting, computing or other operating systems relevant to Customs • operate equipment at premises for specified reasons • operate facilities at the premises for specified purposes • secure a thing that is believed on reasonable grounds to be evidence of the commission of an offence for 72 hours or until a warrant is obtained to seize the thing Section 214AB

  12. Monitoring Powers & other Compliance Obligations Who is a monitoring officer? • A monitoring officer: • is an officer authorised by the CEO of Customs to enter premises and exercise monitoring powers. • may be authorised only if the CEO is satisfied that the officer is suitably qualified, because of their abilities and experience, to exercise these powers • must be issued with identity cards and must produce their card to the occupier before entering premises or exercising any monitoring power Section 214AC

  13. Before entering premises and exercising powers, the monitoring officer must give the occupier of the premises written notice of their rights and obligations under monitoring powers Section 214AE(2) Monitoring Powers & other Compliance Obligations

  14. Monitoring Powers & other Compliance Obligations Exercise of monitoring powers - with consent vs under warrant With the consent of the occupier S214AE A monitoring officer: • may enter the premises (but the occupier must give consent in writing) • must tell the occupier that he/she can refuse consent • must leave the premises if the consent is withdrawn by the occupier (but the occupier must withdraw the consent in writing) • may ask for assistance (but the occupier is not obliged to comply)

  15. Monitoring Powers & other Compliance Obligations Exercise of monitoring powers - with consent vs under warrant With a warrant - Sections 214AF and 214AG A monitoring officer: • may enter the premises without the occupier’s consent (on production of the warrant) • may require the occupier to provide reasonable assistance while the monitoring officer is on the premises (Failure to provide this assistance is an offence) • power to use force against things

  16. Monitoring Powers & other Compliance Obligations Exercise of monitoring powers A monitoring officer: • may ask questions • if either with consent or under warrant S214AH • may ask for assistance • reasonable assistance must be provided S214AI Special powers for Dumping purposes

  17. Export Examination Powers

  18. The New Export Examination Powers • Key points • The export examination powers allow Customs to enter premises and examine goods for export that are not yet under Customs control (that is, they have not been delivered to a place for export) • The powers are exercisable before the goods become subject to the control of Customs and are conferred for the purpose of enabling officers to assess whether the goods meet the requirements of the Customs Act relating to exports • The authorised officer must believe on reasonable grounds that there are or have been in the premises goods that the officer reasonably believes are intended for export Section 122F

  19. Export Examination Powers What Customs CAN do with their export examination powers • Search premises for export goods and documents relating to them S122K • Examine export goods and take samples S122L • Examine, take extracts and make copies of documents relating to export goods S122M • Question the occupier about export goods and request that occupier to produce documents S122Q • Bring equipment to the premises S122P

  20. Export Examination Powers What Customs CANNOT do with their export examination powers • Have just anyone conduct the examination - the person must be an authorised officer S122F • Enter without the authorised officer producing an identity card to the occupier S122H(6) • Enter without the written consent of the occupier S122F • Remain on the premises after the consent has been withdrawn (in writing) S122J

  21. Export Examination Powers The responsibility for allowing the exercise of powers is the “occupier” who is defined to be “a person who is apparently in charge of the premises” Section 122G

  22. New Penalties Mostly strict liability S.33 - Moving controlled goods without authority S.113 - Failure to enter goods for export and allowing loading/export without authority S243T - False or misleading statements leading to loss of revenue S243U - False or misleading statements without loss or revenue

  23. Penalties & Strict Liability

  24. Penalties & Strict Liability Why has the new penalty scheme been introduced? • Because the Australian Customs Service believes • there is a significant risk to revenue if imported or exported goods are inaccurately reported; and • there is a significant risk to the community if prohibited imports such as narcotics are not stopped at the border.

  25. Penalties & Strict Liability How much are the new penalties? • Penalties are expressed as penalty units • One penalty unit = $110 currently (Section 8A Crimes Act) • The range of penalties is 10 - 500 units or $1,100 - $55,000 • An infringement notice may be issued (usually 20% of the penalty) Section 243X

  26. Penalties & Strict Liability What are the levels of the penalty scheme? • Level 1 Court proceedings where fault must be proved • not strict liability - fault (intention) must be proved in court • Level 2 Court proceedings to prosecute strict liability • where an infringement notice is considered inappropriate • when an infringement notice has not been paid • Level 3 Infringement Notice issued by Customs • only applies to some strict liability offences

  27. Penalties & Strict Liability So what IS a ‘strict liability’ offence? • A strict liability offence is one where the fault (intent) does not have to be proved • The fact that the action occurred is sufficient to establish the offence • NOT all offences are strict liability. • The Customs Act is quite specific in each instance

  28. Penalties & Strict Liability Are there defences against strict liability? There are five defences under the criminal code 1. Mistake of fact 2. Intervening conduct or event 3. Duress 4. Sudden or extraordinary emergency 5. Self-defence

  29. Penalties & Strict Liability Defences against strict liability under TML • Voluntary notification of false or misleading statements for Section 243T and 243U • Statements of uncertainty for Section 243T (“Amberline”) Warning: There is no ‘voluntary’ notification once a notice is given as to Monitoring Powers

  30. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 33 Moving, altering or interfering with goods subject to Customs control, without authority • S.33 (1) - Intentionally moving, altering or interfering • Offence committed by person who moves, alters or interferes with goods • Fault based: maximum penalty = 500 penalty units

  31. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 33 Moving, altering or interfering with goods subject to Customs control, without authority • S.33 (2) - Moving, altering or interfering • Offence committed by person who moves, alters or interferes with goods • Maximum penalty = 60 penalty units • Infringement notice available

  32. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 33 Moving, altering or interfering with goods subject to Customs control, without authority • S. 33 (3) Moving, altering or interfering by an employee under direction • Offence committed by employer • Maximum penalty = 60 penalty units • Infringement notice available • Subject to a defence if due diligence can be demonstrated

  33. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 33 Moving, altering or interfering with goods subject to Customs control, without authority • S. 33 (5) Moving, altering or interfering by an employee under intentional direction • Offence committed by person who directs or permits the action • Fault-based: penalty = 500 penalty units

  34. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 33 Moving, altering or interfering with goods subject to Customs control, without authority • S. 33 (6) Moving, altering or interfering by an employee under direction • Offence committed by person who directs or permits the action • Maximum penalty = 60 penalty units • Infringement notice available

  35. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 113 Entry of goods for export • S.113 (1) Failure to enter goods for export and loading/exporting without authority to deal • Offence committed by the owner of the goods • Maximum penalty = 50 penalty units • Infringement notice available

  36. Penalties & Strict Liability Which penalties started on 1 July, 2002? • Section 113 Reporting Examples • $2,000 or more consignments. Applies to whole consignment not lines or types • Goods shipped from one consignor (exporter) to consignee (importer) at same time as single consignment • All goods from Customs warehouse • All goods liable to Excise Duty • Where any drawback or other permit required

  37. Penalties & Strict Liability Which penalties started on 1 July, 2002? • Section 113 - Requirements • Not where under $2,000 except if specific permit required • Owner Liable • AHECC Manual for classification, other requirements • Must get Entry/Authority

  38. Penalties & Strict Liability Who is the “owner”? S. 4 states: “in respect of goods includes any person (other than an officer of Customs) being or holding himself out to be the owner, importer, exporter, consignee, agent or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods”. • ACN 30/2000

  39. Penalties & Strict Liability Which penalties started on 1 July, 2002? Section 243T False or misleading statements, resulting in loss of duty or payment of incorrect refund or drawback • Offence committed by the owner of the goods • Strict liability • Infringement notice available • Penalty (maximum that can be imposed by a court) • the amount of the excess, or • the refund that would not have been payable, or the amount of the excess, as the case may be, or • the drawback that would not have been payable, or the amount of the excess, as the case may be

  40. Penalties & Strict Liability Which penalties start on 1 July, 2002? Section 243U False or misleading statements, NOT resulting in loss of duty • Aimed at Exports • Offence committed by the person who made the statement or omitted the thing • Strict liability • Penalty (maximum that can be imposed by a court) • 50 penalty units for each statement that is found by the Court to be false or misleading • Infringement notice available

  41. Infringement Notices & Guidelines

  42. Infringement Notice & Guidelines The proposed process for serving infringement notices The key elements of the process are: 1. Delegation 2. When an infringement notice CANNOT be served 3. Exception categories 4. The discretionary indicators 5. Timing 6. Matters to be included in an Infringement Notice

  43. Infringement Notice & Guidelines The proposed process for serving infringement notices 1. Delegation The preferred levels of Customs officer status that may issue an infringement notice: • SES Officers; • ACS “Level 5 Officers” with the primary responsibility for cargo management related issues; and • Regional Directors • whether the officer has satisfactorily completed a training course on the exercise of the powers under the Infringement Notice. Important: These are not statutory or mandatory requirements

  44. Infringement Notice & Guidelines The proposed process for serving infringement notices 2. When an infringement notice CANNOT be served • Section 243XA There is no power to serve an infringement notice if, either : • On the information available to the decision-maker it is not possible to form a belief on reasonable grounds that an offence has been committed or • The action in question falls within an exception category

  45. Infringement Notice & Guidelines The proposed process for serving infringement notices 3. The exception categories (when an Infringement Notice cannot be served) (a) Voluntary disclosure of false or misleading statements from the operations of section 243T and 243U

  46. Relevant factors for voluntary disclosure To whom the disclosure was made Whether the disclosure was in writing When the disclosure was made Whether the person making the disclosure had been given notice of proposal to exercise monitoring powers under Section 214AD Infringement Notice & Guidelines The proposed process for serving infringement notices

  47. Infringement Notice & Guidelines The proposed process for serving infringement notices Generally the exception should apply when ALL of the following exist: • The disclosure that a statement was false or misleading was made in writing • The matter to which the statement of disclosure was made to the officer to whom the false or misleading statement was made or another officer doing duty in relation to the matter in which the statement relates • No notice of proposal to exercise monitoring powers had been given under Section 214AD during the time between making of the false or misleading statement of voluntary disclosure

  48. Infringement Notice & Guidelines The proposed process for serving infringement notices 3. The exception categories (when an Infringement Notice cannot be served) b) Statements are made using the “Amberline” process (s.243T) This exception will apply when ALL of the following exist: • The uncertainty was identified by the person making the statement at the time the false and misleading statement was made • The information included or omitted that might make the statement false or misleading in a material particular is identified • The statement sets out reasons why the person is uncertain about the identified information or the reasons for the person’s uncertainty about the effect of omitting the information

  49. Infringement Notice & Guidelines The proposed process for serving infringement notices 3. The exception categories (when an Infringement Notice cannot be served) c) Due diligence - employee moves goods without authority • The employer can show that reasonable steps were taken to prevent the action by the employee • Takes into account the degree of management control, management systems and responsibilities • The exception is said to apply where the employer can demonstrate that it adequately managed, controlled or supervised the actions of the employee while the employee was working

  50. Infringement Notice & Guidelines The proposed process for serving infringement notices 3.The exception categories (when an Infringement Notice cannot be served)) d) Statutory Moratorium • Section 64AB - Late cargo reporting • 6 months generally • May be extended • Pages 10/11 of Guidelines

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