Customs brokers licences might be at risk in situations where the ABF considers that the broker has intentionally or recklessly facilitated a fraud or fails to undertake proper due diligence. These situations can also lead to penalties being imposed on the customs broker as an individual, as well as actions against the brokerage and/ or forwarding business as a company. The challenge for us as customs brokers is that these days we rarely have the opportunity to inspect goods and therefore our declarations to ABF are based only on the documents and information provided by the customer. At the same time, under the Customs Act s.4, we may be held liable for any underpaid duty as if we are the owner of the goods.
Due diligence and good risk mitigation processes such as a review of internal processes and systems must therefore be in place. Secure technology systems and standard operating procedures, especially for system and warehouse access rights and controls, are also imperative.
In addition, good and well drafted standard trading terms and conditions should be properly incorporated into all dealings with clients and those T&Cs should be regularly reviewed and updated as required.
Another risk mitigation process is to purchase adequate and appropriate insurance that covers both the brokerage and its nominees.
The following are suggested red flags only. Any of these items in isolation are probably not suggestive of the customer seeking to undertake illegal activities, but several of these together could be a major concern worth checking and, if necessary, reporting. You know your customers and should have the best sense of whether something seems odd. You should not be afraid to seek an explanation of something that seems unusual.
1. Piggyback consignments
A piggyback occurs when an entity uses the identifying details of another legitimate entity on the Cargo Report or the Full Import Declaration (FID) for a consignment, without the knowledge of the legitimate entity. This is often with the aim of importing consignments containing illicit substances or smuggled goods.
Brokers therefore need to take reasonable steps to verify the identity of their clients. This is not necessarily an onerous task: In the context of piggyback consignments, a simple search of the client in your records or on the internet could reveal discrepancies between the details you have been provided and the legitimate entity’s details.
Brokers could be found to have committed an offence where checks on the identity of clients were not undertaken, especially where a simple verification of the identity would have alerted the broker to the fraud. It is wise therefore for customs brokers to insist on dealing with your clients directly rather than through an intermediary such as an independent freight forwarder, and always perform your own background checks, both in regard to the entity itself as well as the statements being made to ABF.
In a previous incident, for example, rice wine was imported into Australia from Korea, but declared as apple cider vinegar. Following an inspection, duty was charged at the rate for rice wine – not cider – which the freight forwarder pre-paid on behalf of the importer. It proved impossible for the broker or forwarder to reclaim the duty and additional costs because the consignee company disappeared. There have also been cases of people fabricating an identity in an attempt to import goods without paying the full amount of duty. When the companies were not successful, they simply disappeared.
Indicators of potential piggybacking
Some indicators of piggybacking can be:
first time clients
clients who are also the ultimate consignee
industry rumors about illegal activity involving particular shipments and goods
the nature of the consignee’s business is inconsistent with the goods described
inconsistent cargo value with freight costs and goods description
companies using web-based or encrypted email addresses
contact by mobile number or email only with no landline number provided
client not providing all information or documentation in order to avoid identification
2 Suspicious transactions
The following is a list of questions and statements that need to be considered in determining suspicious transactions:
Is the description of the goods on the commercial invoice vague?
Incorrectly declaring goods and/or invoice splitting so that goods subject to lower duty rates show a higher value.
Have you received documents where the values appear to have been altered?
Have you received commercial documents for clearance from an unusual source?
Is the consignment being sent on a door-to-door basis for Delivery Duty Paid with an attached “proforma” invoice?
Has a consignment been artificially split to evade the AUD 1,000 entry threshold?
The goods description is not consistent with goods available from that country.
The weight on the Bill of Lading is not consistent with that type of good, e.g. A 20’ FCL STC 250 car tyres weighing 1,000 kg.
The value of the cargo is inconsistent with freight costs and the description of the goods.
The nature of the consignee’s business is not consistent with the goods described on the Bill of Lading.
The importer states that their business is importing goods but will not tell you the name of their previous customs broker or why they are changing customs broker.
The goods being imported do not match the business of the importer. In one example, the tobacco was described as car seat covers. Only specific businesses import an FCL of car seat covers.
The volume of the goods seems odd. For instance, if the importer states that a container of curtains are for their personal use.
The importer does not have an ABN for what are generally commercial goods.
The customer can only provide pro-forma invoices.
The importer is reluctant to provide proof of payment.
The client is reluctant to confirm verbal details in writing.
The client is unable to provide photographs or other illustrative descriptive material regarding the goods.
The client say a document exists, but fails to provide that document.
The client seem overly keen to collect goods from the port and deliver them to the warehouse.
The importer is prepared to pay extra for a low document or quick import.
The importer wishes to pay cash for a transaction that would usually be paid electronically or by credit.
The importer is requesting a specific tariff classification or goods description where there is no commercial reason for the request.
The delivery route seems odd when taking into account the claimed country of origin.
The importer is demanding delivery times that do not seem motivated by commercial needs.
The value of the goods seems low compared to the freight costs.
The importer is not interested in taking legitimate steps to reduce customs duty payable (such as obtaining a tariff concession order).
The insurance on the goods does not reflect the value of the goods.
The documentation does not look professional or contains basic errors.
The details of the importer cannot be verified.
You can only contact the importer by way of a generic email address such as gmail, or a mobile number.
The goods description in either the commercial invoice or other documents is vague.
There is no certificate of origin in circumstances where you would expect one.
The importer does not seem familiar with, or is not interested in, specific requirements that apply to the goods as described (such as labelling or quarantine restrictions for certain goods).
Are there industry rumours about illegal activity involving particular aircraft/vessels or shipments or airside/seaside personnel?
Workers leaving the aircraft/vessel/wharf carrying bags or boxes or arriving or leaving the aircraft/vessel/wharf at unusual hours or wearing inappropriate or bulky clothing?
Is the worker displaying signs of, or talking about, possessions that indicate unusual wealth?
3 Suspicious behaviour
The following is a list of questions and statements that need to be considered in determining suspicious behaviour:
Clients who are anxious, nervous, evasive or being unreasonably demanding.
Clients making enquiries about Australian Border Force examinations or local security arrangements.
A client collecting their own shipment or organising a third party to collect the goods on their behalf.
Is the client difficult to contact or trying to conceal their identity by only offering a mobile phone number as their contact details?
Is the client claiming to represent a company, but using a web-based email address (e.g. Hotmail, Gmail)?
Is the client not providing all the information or documentation in order to avoid detection or identification?
Is the client the ultimate consignee?
Has the client provided a hotel/motel or other transient location as their address?
Clients settling accounts earlier than is normal practice, using cash, bank cheque or prepaid credit cards.
Is the importer or client insistent on the use of a tariff classification, TCO or GST exemption code that isn’t applicable?
Has the importer advised they will take their business elsewhere when you advise them of tariffs or dumping duties?
Have you been asked to use a Free Trade Agreement and have concerns that the requirements have not been met?
Is the importer providing only “proforma” invoices which are not accepted as valid by ABF?
Is the importer or client reluctant to provide evidence of how the goods were paid for?
Is the importer or client reluctant to show or discuss exactly what the goods are?
Has the importer or client asked for unusual amendments that result in a duty/GST refund after the goods have been delivered?
Has the importer requested re-export or transshipment once the consignment has been held at the border?
Goods made in a country subject to high dumping duty, such as China, are ordered by an Australian company and rather than being shipped direct from China, the goods are transshipped to a third country and then disguised as the goods of that country. This includes new commercial documents and even government-issued certificates of origin.
Is a worker in possession of tools that are inconsistent with their employment?
4 Suspicious delivery details
The following is a list of questions and statements that need to be considered in determining suspicious delivery details:
A client has requested changes to the consignee’s name or delivery address at the last minute without a legitimate explanation.
A delivery address is for sale or rent, abandoned, a hotel/motel, garage, public place or vacant land.
The delivery address is not one used by the legitimate company.
A delivery address or goods description is inappropriate for the nature of the consignee’s business.
The cargo emits an unusual odour (e.g. strong aroma of coffee, glue, perfume or other substances) which is inconsistent with the description of the goods?
Are there any unusual identification marks on some of the packages?
Is the client collecting their own shipment or organising a third party to collect the goods on their behalf?
Does the container you are delivering have the same identification number as on the manifest?
Is the consignee waiting at the front door or outside the premises?
Is the consignee acting nervously?
Is the consignee refusing to open the door or not allowing you to see their face?
Does the consignee refuse reasonable assistance or are they eager for you to leave the premises in a hurry?
s the consignee using an obvious fictitious or generic name?
Is a third person or a taxi collecting the package on behalf of the consignee?
Is the delivery address misspelt, incomplete or vague?
Is the delivery address inappropriate for the nature of the consignee’s business?
Are the delivery instructions unusual?
Has the delivery address been changed regularly, or at the last minute?
Are the goods damaged, modified or tampered with? Is the FCL seal intact?
Are there sounds or movement coming from the goods which could indicate the concealment of wildlife?
Have you noticed any vehicles following you from the time of pick-up to end of delivery? Is someone overly nervous, evasive or refusing reasonable assistance?
5 Encrypted communications
Criminals may utilise encrypted email addresses as a means of securely hiding their communications when organising supply chain logistics.
AS an example, parts or all of piggybacked companies and business names are incorporated into encrypted email addresses to legitimise them. These email details are then used as a contact to communicate with freight forwarders, customs brokers and transport logistics companies as part of the commercial border clearance processes.
Examples of encrypted email providers include:
@barracuda.com
@countermail.com
@criptext.com
@disroot.com
@hushmail.com
@kolabnow.com
@librem.one
@mailbox.org
@mailfence.com
@pm.me
@posteo.de
@prevail.com
@privatemail.com
@protonmail.com
@runbox.com
@scryptmail.com
@startmail.com
@tutanota.com
@virtru.com
@witopia.com
@yandex.com
@zoho.com