In 2011, we reported on the increasing trend towards the criminalization of customs violations worldwide, especially in the United States. Because of heightened scrutiny of imports by US authorities, US importers seeking to enhance their compliance programs have imposed significant burdens on buying agents and foreign manufacturers to demonstrate that their products comply with US law. As these foreign producers have drawn more attention during the importation process, US authorities have begun setting aside civil statutes and instead adopting criminal statutes and relying on mutual legal assistance treaties that enable prosecutors to conduct their investigations internationally. While only US importers historically were investigated under civil statutes, during the last three years US authorities have begun to target US importers, US consignees and exporters based outside the US under robust criminal statutes that can result in significant jail time. 

Now, another novel tool is being used to unearth US customs violations – the False Claims Act (FCA). The FCA is a whistleblower statute that allows private parties to bring fraud suits on behalf of the US government. The FCA subjects violators to treble damages as well as substantial statutory fines. Moreover, the law provides whistleblowers with a substantial incentive to bring a claim because a successful claimant can reap a bounty of between 15 and 30 percent of any recovered damages. This powerful statute is increasingly used by whistleblowers alleging that importers are violating US customs laws. The proliferation of FCA cases is increasing the costs and risks associated with violations of US customs laws and underscores the need for companies to establish and enforce strong internal controls and customs compliance programs.

Please join us on October 25, 2012, as Mayer Brown attorneys Sydney Mintzer (Washington, DC) and Kelly Kramer (Washington, DC) discuss:

  • An update on the criminal enforcement of US customs violations
  • The proliferation of FCA claims targeting customs fraud
  • Ways to mitigate the risk of becoming the target of an FCA claim

CLE credit is pending.

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