U.S. Customs and Border Protection Modernization and ACE

1. U.S. Customs and Border Protection Modernization and ACE Western Cargo Conference San Diego, CA October 13 - 17, 2004

2. Introduction Modernization Background ACE: C-TPAT, FAST, and CSI Overview of ACE Releases ACE/ITDS Integration How to become an ACE Participant Questions and Answers Agenda

3. Key Operational Decisions Are Now Made Everywhere CBP Officers around the world make key operational decisions every day: Who and What toTarget? ToExpedite? ToInvestigate? Typical Daily Volume: 1,131,000 passengers 92,600 trucks & containers 70,100 entries 327,500 vehicles 1,900 aircraft

4. Modernizationis a 15-year initiative to modernize and integrate U.S. Customs and Border Protection to support the core business processes ACE is the first step What is CBP Modernization?

5. Customs Trade Partnership Against Terrorism (C-TPAT) Joint government-business initiative Builds cooperative relationships that strengthen overall supply chain and border security Free and Secure Trade (FAST) Offers pre-registration capabilities and background checks for importers and carriers prior to importing goods for those participating in the C-TPAT Container Security Initiative (CSI) Establishes security criteria to identify high-risk containers Enables pre-screening of high-risk containers beforethey arrive at U.S. ports ACE: Providing the IT Platform for:

6. Overview of Releases • Initial bond sufficiency • Remaining import account types • Administrative messaging • Periodic statements • Initial refunds • Initial payments (including EFT and lockbox) • Enhanced General Ledger Integration with Sub. Ledgers • CFO reports • Violation Billing • Regulatory audit • Initial compliance analysis • Accept cash payments • Broker/carrier Accounts • SAL and action plan enhancement • Notifications and Alerts • Monthly periodic statements • Monthly periodic payments • Subsidiary Ledger • Initial General Ledger Integration with Sub. Ledger Security and Commercial Accounts Cargo and Enforcement Processing PostReleaseProcessing Reference Data CBP NTC, NAS, FAS NTC, NAS, FAS PGAs* TBD Trade Steady Growth of Users *Note: Functionality and users are listed as to when their integration effort will start (PRR). Full integration will take place over multiple releases. **Note: Selectivity & Targeting Prototypes.

7. Account Creation • ACE Secure Data Portal • Initial 41 Account Participants • Review CBP Entry Data in Near Real Time • Manage Issues and Resolve Problems More Effectively • Enable Uniform Customer Support • Support Informed Compliance • Provide Easy Access to Summary Reports, Harmonized Tariff Schedule (HTS), and Compliance Rate Data • National information What: Who: Benefits: Account Creation R2 Security and Commercial Accounts • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing PostReleaseProcessing Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

8. Account Creation: ACE Secure Data Portal New Account Types Reports Over 60 downloadable reports. Significant Activity Log (SAL) Identify Customs Brokers

9. Summary of HTS Numbers by Value Report Summary of IR Numbers by Date, by Value Report Summary of IR Numbers by Number of Cargo Exams Report Summary of Filer Codes by Number of Cargo Exams Report Summary of Consignee Numbers by Date, by Value Report Summary of Filer Codes by Value Report Summary of Filer Codes by Number of Team Reviews Report Summary of HTS Numbers by Number of Team Reviews Report Importer and Broker Reports: ExamplesAvailable through the ACE Secure Data Portal • Cargo Entry Details Report • Cargo Entries by HTS Number Report • Cargo Entry Lines by Filer Code Report • Cargo Exam Details by Date Range Report • Cargo Exam Details Report • Team Review Details by Date Range Report • Team Review Details by Entry Number Report • Entry Summary Lines by Port of Entry Code Report • Entry Summary Lines by Filer Code Report • Filer Activity Summary – Top 5 Ports • Importer Activity Summary – Top 5 Filers • Sub-ledger Report

10. Account Creation: Quick Views Compliance Quick View Options

11. Periodic Payment R3 Security and Commercial Accounts Periodic Payment • Initial Account Revenue Periodic Statements and Payments (Monthly) • Automated Clearinghouse (ACH) Credit and ACH Debit • Additional Account functionality • ACE Account Participants • Enables Importer Accounts to designate brokers to file on their behalf • Expands Account Management to enable Brokers to view entry summary historical data • Expands Account Profile to include carriers • Moves from transaction-based to account-based payments • Enables importer accounts to designate brokers to file on their behalf • Enables brokers to view entry summary historical data • Expands account profile to include carriers • Supports informed compliance What: • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing Who: PostReleaseProcessing Benefits: Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

12. Periodic Payment View Periodic (Monthly) Statement Drilldown to Daily Statement Detail Drilldown to Entry Detail on Statement

13. Why? The Trade Act of 2002, Pub. L. 107-210, dated August 6, 2002, amended Section 505(a) of the Tariff Act of 1930 (19 USC 1505(a)) by adding, “As soon as a periodic payment module of the Automated Commercial Environment is developed, but no later than October 1, 2004, a participating importer of record, or the importer’s filer, may deposit estimated duties and fees for entries of merchandise no later than the 15th day of the month following the month in which the merchandise is entered or released, whichever comes first.” Periodic Payment

14. Manage their own unique group of users within their ACE Portal Broker Account File Periodic Monthly Statements Run a variety of reports extracted from CBP data 5 distinct Quick View Reports Periodic Statement Reports 60+ reports regarding their own and their clients entries Apply for an ACE Importer Account Access to the Significant Activity Log (SAL) and Action Plan Periodic Payment - Brokers Benefits

15. Benefits to CBP Meet legislative mandate for establishing an automated system to accommodate periodic payments Short-term: Material Weakness identified by OIG addressed - Subsidiary Ledger created in ACE Long-term: Less work for CBP Field Offices - fewer daily collections transactions Benefits to the Trade Access to operational data through the ACE Secure Data Portal The ability to interact electronically with CBP Periodic MONTHLY payment for multiple entries/transactions at one time Additional float on money Periodic Payment

16. Duties collected via the ACE Periodic Monthly Statement continue to increase exponentially since the inception of this feature of ACE in late June 2004. ACE Periodic Monthly Statement

17. e-Manifest: Trucks e-Manifest: Trucks • Cargo and enforcement processing for trucks • eRelease and automated truck manifest, including in-bond • Consolidated interface for CBP Officers • Transponder and proximity card • ACE Account Participants • Expands to Truck Carriers and their authorized agents initially at seven selected land border ports • Provides Standard Automated Manifest at land ports • Enhances Security in the supply chain • Enables CBP Officers to make faster, better, earlier decisions What: Who: Benefits: R4 Security and Commercial Accounts • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing PostReleaseProcessing Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

18. The Flow of Intelligence at a Border Station Release Shipment Hold and Examine Officer in booth at Otay Mesa checksACEscreen for results of Targeting and Selectivity Analysis Officer Decides To: As trucks approach border RF signal transmitted to ACE OR

19. Account Revenue and Secure Trade Data R5 Account Revenue and Secure Trade Data • Entry summary processing through liquidation, antidumping/countervailing duties, quota/visa, reconciliation, and supporting selectivity • Enhanced financial processing • Initial automated manifest functionality for all modes of transportation • ACE Accounts - Carriers/NVOCCs, Sureties, Brokers, Importers • Acceptance of additional payment types • Credit card payments • Payments via the internet • Streamlined entry summary process • ACE is the system of record for entry summaries Security and Commercial Accounts What: • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing Who: PostReleaseProcessing Benefits: Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

20. E-Manifest: All Modes and Cargo Security R6 E-Manifest: All Modes and Cargo Security • Receive Entry • Full Electronic Manifest • Cargo Tracking • In-bond • Release • ACE Account Participants - Bonded Facility Operators, Cartmen/Lightermen, Couriers, Carriers/NVOCCs, Sureties, Brokers, Importers • Electronic manifest will enable visibility of shipments transferring between transportation modes • Cargo tracking will enable visibility of shipment lifecycle Security and Commercial Accounts What: • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing Who: PostReleaseProcessing Benefits: Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

21. Exports and Cargo Control R7 Exports and Cargo Control • EVERYTHING ELSE • FTZ/Warehouse Processing • Exports • Protest Processing • Drawback Processing • Document Management • ACE Accounts - FTZ Operators, Exporters/USPPI, Bonded Facility Operators, Sureties, Cartmen/Lightermen, Couriers, Carriers/NVOCCs, Brokers, Importers • Fully automated, electronic end-to-end cargo process • Integrated drawback/export process • ACE becomes the system of record Security and Commercial Accounts What: • Technology Prototypes: • Knowledge Based Risk Mgmt. Prototype** • IIF Prototype** Cargo and Enforcement Processing Who: PostReleaseProcessing Benefits: Reference Data Steady Growth of Users CBP PGAs* Trade *Note: Functionality and users are listed as to when their integration effort will start based on the ACE Program Plan version 10. Full integration will take place over multiple releases. Global Blueprinting conducted from October 2003-May 2004. **Note: Not part of Release 3.

22. To implement a secure, integrated, government-wide system for the electronic collection, use, and dissemination of the international trade and transportation data essential to the missions of federal agencies. ACE/ITDS Vision

23. Current Data Flow – All Methods CIA Foreign Intelligence ATF Alcohol, Tobacco, Firearms, Explosives FDA Safety of Food, Drugs, & Medical Devices Traders DEA Importers and Exporters Drug Interdiction FMCSA Trucks and Buses; and HAZMAT Transport FBI Carriers Investigations Truck, Air, Rail, and Sea NSA Electronic Intelligence EPA Passengers Environ-mental Safety International Air, Land, Sea FWS Wildlife and Plants CDC Communic-able Diseases NHTSA Automobile Safety Solid Lines = All Methods of Communication Broken Lines = Two Way Electronic Communication CBP Import Export Passengers NRC Radioactive Material

24. ACE/ITDS Data Flow - Electronic CIA Foreign Intelligence ATF Alcohol, Tobacco, Firearms, Explosives FDA Safety of Food, Drugs, & Medical Devices DEA Drug Interdiction Traders FMCSA Trucks and Buses; and HAZMAT Transport ImportersandExporters FBI Investigations NSA Electronic Intelligence ACE/ITDS Carriers EPA Truck, Air, Rail, and Sea Environ-mental Safety FWS Wildlife and Plants CDC Communic-able Diseases NHTSA Automobile safety CBP Import Export Passengers NRC Radioactive Material

25. More Effective Enforcement and Analysis Availability of Pre-Arrival Information Cargo Tracking Access to More Accurate and Timely Transaction Information Enable Comprehensive Risk Management Promote Multi-Agency Collaboration of Enforcement Initiatives Efficiency Promote Information Sharing Among Federal, State, and Local Government Agencies Accelerate Border Clearance Reduce Costs Eliminate Paper Systems Trade Facilitation Provide Single-Window Transaction Filing for the Trade Harmonize Government Data Requirements ACE/ITDS Benefits

26. Becoming an ACE Participant • Eligibility Requirements: • C-TPAT Certified • Internet Connectivity • Bond Rider • Check Federal Register Notice Vol. 69, No.173 • Application Process: • Importer Name • Unique Importer of Record Number • Statement certifying C-TPAT participation • Statement certifying capability to connect to the internet • E-mail information to ACENow@dhs.gov • CBP Policy: • Able to accept up to 1100 ACE Accounts for Release 3 and 4 • Priority will shift to create well balanced blend of accounts

27. Questions and Feedback? ? Visit the Modernization & ACE site on www.cbp.gov/modernization or write us at: CBPMO@dhs.gov