The Canada Border Services Agency’s (“CBSA”) Administrative Monetary Penalty System (AMPS) imposes monetary penalties (“AMPs”) for non-compliance with trade rules. AMPs levied are proportionate to the type, severity, and frequency of the infraction. According to the government, the goal of the system is to create a level playing field for Canadian businesses by ensuring that there is a cost for non-compliance with trade rules.

A (fairly) recent announcement from the CBSA has indicated that the AMPs associated with 22 different contraventions related to commercial trade will be increased, effective April 1, 2019.

According to the announcement, the changes were prompted by the 2017 Audit of Customs Duties by the Auditor General of Canada which criticized the effectiveness AMPs as being too low to ensure compliance with trade programs.

The changes nearly triple the fines for certain offences. The detailed break-down of the changes are as follows:

For contravention codes C004, C152, C168, C169, C223, and C224: (1) the penalty in the first instance increased from $150.00 to $500.00; (2) the penalty in the second instance increased from $225.00 to $750.00; and (3) the penalty in the third an each subsequent instance increased from $450.00 to $1,500.00. These codes cover issues related to the Special Import Measures Act, product descriptions, and timelines to repay duties and refunds.

For contravention codes C080, C081, C082, C083, C350, C351, C352, and C353: (1) the minimum penalty is increased from $150.00 to $500 for the first instance; (2) the minimum penalty is increased from $225.00 to $750.00 for the second instance; and (3) the minimum penalty is increased from $450.00 to $1,500.00 for the third and each subsequent instance. These codes cover issues related to failure to make trade data corrections and pay duties when ordered to do so.

For contravention codes C157, C214, C215, C216, C217, C218, and C298: (1) the penalty in the first instance is increased from $300.00 to $600.00; (2) the penalty in the second instance is increased from $450.00 to $1200.00; and (3) the penalty for the third and each subsequent instance is increased from $900.00 to $2,400.00. These codes cover issues related to failures to pay duties arising from diversions or remissions, and the failure to provide certain kinds of records to customs officers.

Last, for contravention code C336, the flat penalty of $100.00 per instance has been doubled to $200.00 per instance. This code covers the failure to pay duties on goods accounted for under subsections 32(2) and 32(3) of the Customs Act.

Note, the Master Penalty Document, containing all of the contravention codes and penalties can be found here.

While these AMPs appear small taken singularly, when applied to a series of import transactions, their potential impact is quite significant!

The CBSA also noted that it would not alter AMPs related to the timing for accounting for imported goods under C288 (failure to account for imported goods within 5 business days of their release where estimated value is greater than $2,500.00), and C292 (failure to account for imported goods no later than the 24th day of the month following the month of their release where estimated value does not exceed $2,500.00). The CBSA stated that consultations with industry identified these AMPs as having potentially disproportionate impacts on small and medium-sized businesses.

Importers should take notice of these changes and take steps to review their customs processes to ensure that they are not found in breach of the rules. Additionally, importers may want to turn their minds to other recommendations of the Auditor General, who has proposed, among other things, that the CBSA review the period allowed for retroactive changes on import forms (which the CBSA intends to complete by December 2019).

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