Broker Compliance

Broker Duties, Supervision, Records & Penalties

What a licensed broker must do day to day: supervise, keep and protect records, handle client money, advise clients, deal properly with forwarders and CBP, and what happens when it does not. Expect several Broker Compliance questions built on 19 CFR 111.21-111.42 and Part 141's power of attorney rules.

Broker Compliance4 min read8 sections

Must-know for the exam

Records breach: notify the CBP Security Operations Center within 72 hours; updated list of compromised importer numbers within 10 business days (111.21(b)).
Keep original records, including electronic ones, inside the US customs territory (111.23(a)), for 5 years after the date of entry (111.23(b)).
Revoked powers of attorney: keep 5 years after revocation or after the client stops being active, whichever is later (111.23(b)).
Produce records within 30 calendar days of a DHS request unless DHS allows longer (111.25(b)).
Client money received after the due date: pay CBP within 5 working days; account for client funds within 60 calendar days (111.29(a)).
New and terminated employees: report within 30 calendar days (111.28(b)). Departing qualifying officer: written notice immediately (111.28(d)).
Client error or omission: advise promptly, explain the fix, keep a record (111.39(c)). Quitting a fraudulent client: report it to CBP (111.32).
Forwarder referrals: the broker signs the power of attorney directly with the importer of record (111.36(c)(3)).
Partnership powers of attorney last at most 2 years; others may be unlimited (141.34). Revocation is effective when CBP receives it (141.35).
Penalty in lieu of suspension: up to $30,000 aggregate for a broker; unlicensed persons up to $10,000 per transaction (111.91).

On this page · 8 sections

Traps that cost marks

Counting 72 hours as three business days.
Waiting for CBP to ask before sending the updated list.
Assuming the recordkeeping contact must be a licensed broker.
Assuming electronic records are exempt from the location rule.
Applying the 5-year rule from the date the power of attorney was signed.
Counting from the date of the warehouse entry instead of the last withdrawal.
Using working days, or a 60-day period from other broker rules.
Thinking partial or anonymized disclosure is allowed without written authorization.

Why it matters on the exam

Released exams test these duties with short fact patterns: a breach discovered on a Friday, a client's payment after the due date, a forwarder who wants a referral fee. The answer is almost always a day count or a named office in 19 CFR Part 111.

Supervision and employees

Every licensed sole proprietor, partner or officer must exercise responsible supervision and control, and the organization must employ enough licensed brokers for the complexity of its work (111.28(a)). CBP may weigh 13 factors, including training, written instructions, reject rates, access to current regulations and the HTSUS, supervisory visits to offices without a licensed broker, and audits by licensed brokers.

•Employee list before the permit issues; changes within 30 calendar days (111.28(b)).
•Broker not liable for false data an employee supplies, absent culpability (111.28(c)).
•Qualifying officer leaving: immediate written notice to the Executive Director, copy to the processing Center (111.28(d)).
•Ownership change in a private brokerage: immediate written notice; CBP may investigate a new principal (111.28(e)).

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