Unauthorized customs clearances (The lodging of a customs declaration without empowered by (customs) representative/agent)

When companies are moving products across international borders, customs formalities are required. The company can either do the customs clearances them self or outsource it to a representative (customs broker or agent). When customs activities are outsourced, an agency relationship is created. An agency relation has legal consequences that require mitigation by reaching a consent, preferably documented in an agreement between principal and agent. This agreement should include empowerment and agreement limitations. Customs legislation covers legislation related to outsourcing customs activities to a representative. Not following legislation may lead to risk for the parties involved in the customs clearance process. With the help of reports from the government, importers and exporters can archive visibility on their customs clearance activities. This report can reveal agents acting for the company as customs agents not covered by an agreement or empowerment. Cisco has noticed that unauthorized clearances are happening in their logistics supply chain operation. Cisco compliance teams are trying to limit unauthorized customs clearance and considered every unauthorized clearance “one is one too many”.

The purpose of this research is to increase the cross disciplinary knowledge between the domain of legislation and the outsourced (customs) services to develop a joint understanding of the domains principles to facilitate a better interaction between the domains. By investigating the phenomena unauthorized clearances through a case study, practical knowledge will be gained on the phenomena to answer the research questions. This all to understand and answer the primary research question: how to control and mitigate possible compliance risks related to unauthorized customs clearances activities.