Ensuring the smooth flow of trade across our borders is vital for Canadian industry. To this end, the Administrative Monetary Penalty System (AMPS) came into effect in 2002. The goal of AMPS is to promote voluntary compliance with customs legislation by imposing penalties for non-compliance. The aim is to create a level playing field for Canadian businesses by making sure there is a cost for those who don’t comply.
Administered by the Canada Border Services Agency (CBSA), AMPS can impose penalties on importers, exporters, brokers, and carriers. Now, if your business properly complies with custom requirements, AMPS will not affect you. But watch out – penalties can be unpredictable and hard to fight, so a little knowledge can go a long way.
There are approximately 350 different AMPS penalties ranging from small amounts to a maximum of $25,000 for a single infraction.In fact, as of October 2004, the CBSA had collected over $15,500,000 from 41,954 contraventions. And, the risk of receiving a fine is expected to rise sharply as the program moves past its early stages of implementation. To add salt to the wound, since March 22, 2004, fines or penalties imposed are not income tax deductible.
AMPS has largely replaced the use of seizure and forfeiture, which is now reserved for only the most serious contraventions. Importers are the major offenders of AMPS compliance, owning 58% of the penalties that are levied.
Penalties increase with repeat occurrences of the same infraction. For example, the penalties for “failure to report” for all imported goods valued at $1,600 or greater are:
1st contravention: $2,000, or 20% of value for duty, whichever amount is greater;
2nd contravention: $4,000, or 40% of value for duty, whichever amount is greater; and
3rd and subsequent contraventions: $6,000, or 60% of value for duty, whichever amount is greater.
Some of the more common infractions include:
• Inaccurate valuation of goods
• Failure to report importation of goods
• Incomplete certificates of origin
• Failure to adjust entries when the information originally reported was in some manner incorrect
• Reporting goods as arrived prior to authorized time frames
• Failure to provide the required export permit, licence or certificate prior to the exportation of goods
While many infractions are discovered in the course of a desk audit or review, errors affecting importers and exporters are usually identified in the course of the customs clearance process… and a penalty assessment simply arrives unannounced in the mail!
Also important to note, actions taken (or not taken) by your customs broker may cause penalties to be assessed against your organization. It is the Importer of Record (you!) that will, in most cases, be identified as the person responsible for the infraction and the payment of the penalty.
Something else to watch for – low value courier shipments (those transported by couriers such as FedEx or UPS where the value for duty is less than $1,600) pose a unique exposure to AMPS since they are often treated casually simply because they are of low value. The related invoices often don’t contain accurate information which could result in a sizable fine.
Beware also of the inclusion of a gift to an importer in a shipment. This is a common practice but, if the gift is not declared and is discovered by CBSA, the entire shipment could be at risk and the importer could be penalized (and marked for smuggling with increased future examinations!).
Understanding your obligations and your state of compliance is an important step in looking at your customs-related business systems, processes and procedures. There are several documents out there to help you navigate your way through the red tape and simplify the process. For more information on AMPS, visit www.cbsa.gc.ca/amps.
Remember, a little knowledge can go a long way to preventing an avoidable financial drain on your business.