Archives For Customs

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The following article featured in BusinessLive (eEdition) on 25 July 2019. It is authored by John Grobler. The article was compiled with the financial support of Journalismfund.eu’s Money Trail grant programme. 

Chinese ‘lying money’, or fei qian, is an ancient form of value exchange. But its modern incarnation is blamed for stripping Africa of its resources.

The secret of Chinese commercial success in Africa, as suggested by an 18-month investigation into the drugs-for-abalone and rosewood trade and a major Namibian tax fraud case, is an ancient system that not only allows African countries to be robbed of taxes, but also plays a part in financing the global $270bn-a-year wildlife contraband trade.

Fei qian, or “flying money”, dates back about 1,200 years, to the Tang Dynasty in China. In its simplest modern incarnation, it is a low-cost and trusted method of remitting money, much like the Islamic hawala system. For example, a person who wants to send funds to a recipient in Africa will pay a fei qian broker in China. For a commission, the broker will arrange that a counterpart in Africa pays the recipient, again for a commission. The two fei qian brokers later settle their account through, for example, the transfer of commodities of equivalent value — but also sometimes through less salubrious methods such as transfer mispricing or invoice manipulation.

In practice, the system relies on the systematic underinvoicing of Chinese imports into Africa and a seamless chain of payments system in which accounts are settled through the transfer of high-end — and often illicit — goods such as abalone, rosewood, rhino horn and ivory. In brief: goods are undervalued on their import documentation; they are then sold for cash; and that undeclared cash is subsequently channelled into high-end commodities that are remitted to China to balance the fei qian books.

“The trick behind fei qian is that the money never actually leaves China,” says a former Singaporean finance expert, speaking on condition of anonymity. “It’s just the commodities that get moved around” as part of a longer payment chain among the Chinese diaspora.

Unlike barter trade, fei qian is not a straight swap; it is an exchange in stored value that leaves no paper trail, except in the books of the fei qian operators themselves. What makes the system even more impenetrable, the investigation has found, is that these operators mostly seem to be older, well-established women working in a closed network of mutually trusted contacts.

This nexus, and lack of paper trail, means fei qian is largely invisible. But it occasionally appears as a gaping hole in a country’s balance of payments account with China – as Namibia has discovered in an ongoing import-tax fraud investigation.

Jack Huang, a business associate of President Hage Geingob, and Laurentius Julius, a former Walvis Bay customs official and now a customs clearing agent, are among eight suspects facing 3,215 charges of fraud and money laundering in the Windhoek high court. Continue Reading…

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Fifty-five pieces of rhino horn were found hidden inside shipments of plaster at Hanoi International Airport, Vietnam’s state media reported Saturday.

Customs officers broke open plaster molds from 14 shipments to uncover the illegally trafficked horns, which weighed 125 kilograms (275 pounds) in total, according to the Vietnam News Agency.

Vietnam has the world’s largest market for illegal rhino horn, according to the World Wildlife Fund. A single horn can fetch $100,000 in Asian countries such as China and Vietnam, where buyers believe it can cure health problems from hangovers to cancer, and use it as a lifestyle drug. The global market is thought to be worth about $500 million.

The seizure in the Vietnamese capital came after Hanoi police arrested a man accused of running a wildlife trafficking ring on July 23.

That arrest followed the discovery of seven frozen tigers in a car parked in the basement of a Hanoi skyscraper.

Source: CNN, Helen Reagan and Angus Watson, 29 July 2019

MSC Gayane

US customs officials seized a container ship financed by JPMorgan this week after authorities found nearly 18 tons of cocaine with an estimated street value of $1.3 billion in the vessel.

The drug bust on the Liberian-flagged MSC Gayane is surprising for several reasons. The sheer quantity of cocaine it was carrying, its links to JPMorgan, its presence in the US, and the recent string of West African drug busts are worth noting.

A container ship financed by JPMorgan was seized by US customs officials this week after authorities found nearly 18 tons of cocaine with an estimated street value of $1.3 billion on the vessel. The drug bust on the MSC Gayane is surprising for several reasons, outlined below.

The roughly 39,500 pounds, or 17.9 metric tons, of cocaine – about the same weight as three African bull elephants – found aboard the MSC Gayane outweighed the total amount of cocaine that passed through West Africa in 2013 and all of the cocaine seized across Africa from 2013 to 2016, according to the United Nations Office on Drugs and Crime.

The vast quantity may reflect a supply glut. Global cocaine manufacturing surged by a quarter in 2016 to 1,410 tons, according to the World Drug Report 2018. The production boom is centered in Colombia, where cultivation of the coca plant rose 17% to 171,000 hectares in 2017, according to the UN.

The link between the MSC Gayane and JPMorgan may be the most surprising aspect of the drug bust.

The MSC Gayane is operated by the Switzerland-based Mediterranean Shipping Co., but JPMorgan helped finance MSC’s purchase of the ship. The two reportedly structured the purchase so the ship was owned by client assets in a transportation strategy fund run for JPMorgan’s asset-management arm.

JPMorgan hasn’t yet publicly addressed its association with the vessel, and it has declined to comment to Markets Insider.

The MSC Gayane sailed under the flag of Liberia, a West African country. West Africa is a popular transit route for smugglers between South America and Europe because of its porous borders, weak rule of law, largely unmonitored coastline, and limited infrastructure and resources. The proportion of cocaine seizures in Africa accounted for by West Africa rose to 78% in 2016, “reflecting the rapidly growing importance of West Africa as a transit area,” the UN Office on Drugs and Crime said.

But there appears to be little drug smuggling between West Africa and the US, making the MSC Gayane drug bust highly unusual. Higher street prices and a lower risk of getting caught make Europe a more lucrative and attractive market than the US, the Nigerian drug smuggler Chigbo Umeh told The Guardian in 2015.

While notable, the ship’s flag doesn’t necessarily implicate Liberia.

“A Liberian registered ship is not in itself a link with the West Africa drug economy,” Mark Shaw, the director of the Global Initiative against Transnational Organized Crime, said in an interview with Markets Insider. “Liberia serves as a flag state for much shipping.”

The drug bust on a Liberian-flagged vessel is the latest in a string of major seizures linked to West African countries this year.

In May 2018, Algerian officials seized more than 1,500 pounds of cocaine on a Liberian-registered container ship that was transporting frozen meat from Brazil, according to the BBC. In February of this year, Cape Verde officials found 21,000 pounds of cocaine, with a street value north of $700 million, on a Panamanian-flagged vessel. A month later, authorities in Guinea-Bissau notched their biggest-ever cocaine bust – and the country’s first in a decade – when they discovered more than 1,700 pounds of the drug hidden in a false bottom of a truck loaded with fish.

“There were doubts whether West Africa was still being used as a major transit route, but these seizures seem to suggest that there is a return,” Shaw said in an interview with Bloomberg in March. “It’s a surprise and it’s very significant.”

Source: The article was written by Theron Mohamed, Market Insider, 11 July 2019

SAFE FoS 2018 Edition2

The WCO has published a 2018 edition of its Framework of Standards. The 2018 version of the SAFE Framework augments the objectives of the SAFE Framework with respect to strengthening co-operation between and among Customs administrations, for example through the exchange of information, mutual recognition of controls, mutual recognition of AEOs, and mutual administrative assistance.

In addition, it calls for enhanced cooperation with government agencies entrusted with regulatory authorities over certain goods (e.g. weapons, hazardous materials) and passengers, as well as entities responsible for postal issues. The Framework now also includes certain minimum tangible benefits to AEOs, while providing a comprehensive list of AEO benefits.

The updated SAFE Framework offers new opportunities for Customs, relevant government agencies and economic operators to work towards a common goal of enhancing supply chain security and efficiency, based on mutual trust and transparency.

Customs officers and trade practitioners also be on the lookout for then new WCO Academy course on SAFE and AEO. The Framework of Standards to Secure and Facilitate Global Trade is a unique international instrument which usher in a safer world trade regime, and also heralds the beginning of a new approach to working methods and partnership for both Customs and business. This E-Learning course aims to present this tool and the benefits of its implementation.

WCO Compilation of Integrity PracticesThe WCO Secretariat has undertaken a new initiative involving the compilation of good internal control [governance] practices by Customs administrations, and their relationship with external controls. The Secretariat carried out a survey of Members to find out how they implement principle 6 of the Revised Arusha Declaration. The responses indicated that internal control functions can be structured differently and do not operate in the same way.

The survey collected material on the experiences of Members and on their integrity practices, with a view to compiling a good practice guide which Members could use to enhance their integrity strategies, including external oversight. It consisted of 18 questions, and was divided into four sec- tions: (1) Governance of Internal Control; (2) Operational Aspects; (3) Relationship with External Controls; and (4) Sharing Good Practices with Other Members. Responses were received from 58 Member administrations. Download this link.

 

 

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Another feature filled WCO News e-publication featuring Blockchain big time!

TAXUDCustoms officers seized 31m counterfeit items at the EU’s borders last year worth more than €580m – with food, toys and cigarettes intercepted most frequently.

The total numbers of seized products has declined since 2016, but there is a worrying trend towards a higher proportion of potentially dangerous items such as food, medicines, electrical goods and toys, which accounted for 43 per cent of all detained goods. That’s up from 26 per cent in 2015 and 34 per cent in 2016.

Almost a quarter (24 per cent) of the seizures were for foodstuffs, followed by toys making up 11 per cent, cigarettes at 9 per cent and clothes at 7 per cent of the total.

“The EU’s customs union is on the front line when it comes to protecting citizens from fake, counterfeit and sometimes highly dangerous goods,” said  Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.

“Stopping imports of counterfeits into the EU also supports jobs and the wider economy as a whole,” he added. Given the increasingly likelihood that the UK will no longer be part of the customs union post-Brexit, it’s worth noting that UK customs seized almost 1.5m goods last year.

Once again, China and Hong Kong were the primary sources for the vast majority of illicit goods, at 73 and 10 per cent, respectively, with China down from 81 per cent in the prior year and Hong Kong up from around 8 per cent. Other countries have emerged as hot spots for particular product categories, however, with Moldova a source of illicit alcohol, the US for other fake beverages and Turkey for counterfeit clothing. India was the top country of origin for fake, and potentially harmful, medicines.

In terms of modes of transport, two thirds (65 per cent) of all detained articles entered the EU via the maritime route, usually in large consignments. This was followed by air traffic which transported 14 per cent, and courier/postal traffic which together accounted for 11 per cent and mainly involved consumer goods ordered online such as shoes, clothing, bags and watches.

The Commission said the downturn in seizures comes after it implemented new measures aimed at protecting intellectual property rights last year, with a particular emphasis on helping smaller companies and startups respond to breaches.

Source: Securingindustry.com, P.Taylor, 2018.09.27

GEC

Land borders in the SADC region are critical zones for unlocking economic development, regional value chains and trade. In this light the Global Economic Governance Africa programme is working with the Zimbabwe Trade Forum and the University of Zambia to look at two case studies on the border regions around Beitbridge and Chirundu. The borders, between South Africa and Zimbabwe, and Zimbabwe and Zambia, represent critical links in the North-South Corridor and are vital in both regional development initiatives as well as bilateral ones between the countries.

The seminar, attended by trade experts, policy makers and researchers from South Africa and the region discussed the field research findings of a study at the Beitbridge and Chirundu border posts conducted on behalf of the programme in June 2018.

The following presentation documents should be of interest to all parties concerned with inter regional trade and trade facilitation development initiatives.

It is also worthwhile to visit Tutwa Consulting’s webpage as it explains how the surveys were conducted and provides salient features in relation to each of the border posts concerned which may not necessarily be apparent in the presentation documents as such.

Source: Tutwa Consulting

WCO-Unveiling the Potential of Blockchain in CustomsThe World Customs Organization (WCO) has initiated work to identify possible case studies and uses of blockchain for Customs and other border agencies with a view to improving compliance, trade facilitation, and fraud detection (including curbing of illicit trade through the misuse of blockchains and Bitcoins), while touching on associated adjustments in legal and regulatory frameworks.

The objective of this research paper is to discuss ways in which Customs could leverage the power of blockchain and the extent to which the future of Customs could be shaped by the use of blockchain-based applications. Blockchain projects are currently in the beta testing phase in the finance sector (facilitating inter-banking system processes), insurance sector (preventing fraud and accelerating coverage) and international trade. With regard to the latter, this paper focuses its attention on two initiatives.

  • The first was launched by MAERSK-IBM as a global trade digitalization platform to which Customs administrations are expected to join.
  • A second initiative consists of an “information highway”, joining the National Trade Platform of Singapore and the Trade Finance Platform of Hong Kong, with a view to creating a Global Trade Connectivity Network (GTCN).

A conclusion that has been reached after discussion is that Customs would be able to have a broader and clearer picture of international trade particularly in terms of the movement of cargoes and consignments as being tied with the flow of capital. With blockchain-based applications, therefore, Customs could become a full-fledged border regulator with greater capabilities in the future.

Source: WCO, Y.Okazaki, June 2018

 

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A new online course on the 2017 Edition of the Harmonized System (HS) has just been released by the WCO.

Through educational videos and a knowledge test, this course allows you to learn about the major changes in the 2017 version of the HS.

This course is available on CLiKC!, the WCO online learning platform, but is also the first WCO e-learning course which is built using mobile learning technologies. By downloading the app, available on the App Store and on Google Play, users will benefit from more features such as a search engine which indicates if a specific HS code has been amended in the 2017 version.

The app is available for free to anybody who wishes to learn about HS2017.  The added feature for our Member administrations’ Customs officers, who have an account on this website, is that it will be synchronized with CLiKC!

Source: WCO

Global Illicit Trade Environment Index.PNGThe Economist Intelligence Unit and the Transnational Alliance to Combat Illicit Trade (TRACIT) have released their Global Illicit Trade Environment Index, ranking 84 countries on the extent they enable or prevent illicit trade.

Finland ranks first in the Index with a score of 85.6 (out of 100), just barely ahead of the U.K. The rest of the top 10 includes a handful of European countries (Sweden, Austria, Netherlands, Denmark and Germany), along with the U.S., Australia and New Zealand. South Africa features 42nd in the list.

At the bottom of the Index ranking is a group of developing economies from all regions of the globe. Libya ranks last with a score of 8.4, and is joined by Iraq in 83rd place, scoring less than six points better. Filling out the bottom ten of the Index are: Myanmar, Laos, Venezuela, Cambodia, Kyrgyzstan, Belize and Ukraine.

Regionally, Europe (34 economies in the index), earns the highest the average score (68.0). The Asia-Pacific (21 economies) comes second at 56.0 and the Americas (19 economies), including the U.S. and Canada, is third at 54.0. The Middle East and Africa (10 economies) comes in last, with an average score of 50.0.

The Index is constructed on consideration of government policy, supply and demand, transparency and trade, and customs environment.

Download the White Paper here!

“The Index provides essential information to help policy makers better understand the regulatory environment and economic circumstances that encourage illicit trade,” said Jeffrey Hardy, Director-General at TRACIT. “Illicit trade not only hurts consumers and takes revenue away from governments, it threatens the security of nations by supporting transnational criminal syndicates and terrorist groups, and governments and the private sector must work together to fight it.”

TRACIT hopes that economies that are at the top will concentrate on implementation and enforcement and says they need to provide leadership to help countries with lower scores to build a better environment to prevent illicit trade.

TRACIT calls for Governments across the globe to:

  • Commit to illicit trade related treaties;
  • Tighten controls on money laundering;
  • Reduce corruption;
  • Rationalize tax policies;
  • Strengthen law enforcement efforts;
  • Protect intellectual property;
  • Enhance interagency cooperation;
  • Improve governance of FTZs;
  • Report and share statistical data across borders.

Source: The Economist, Illicit Trade Index, June 2018

Tin Can Island Nigeria

Nigerian importers operating in all ports in Lagos are facing a tough time in clearing their consignments via the new Nigeria Customs Service (NCS) clearing platform, created to facilitate trade.

The platform

The new IT platform introduced to aid smooth clearance of cargo at the various port terminals has been given the Service sleepless nights before it was further wrecked by windstorm few days ago.

The platform, called Nigeria Customs Integrated System (NCIS)II is an improvement on  earlier automation processes such as Automate System for Customs Data (ASYCUDA), ASYCUDA 2.3, ASYCUDA 2.7,ASYCUDA ++, and NICIS I, which is a software specially created to enhance seamless cargo clearance.

Under ASYCUDA, agents could only make five declarations in one hour, but under the NICIS II, they can make up to 18 declarations within an hour.

Also, under NICIS I, customs agents could view what other control agencies such as National Agency For Food And Drug Administration And Control (NAFDAC), National Drug Law Enforcement Agency (NDLEA), Standards Organisation of Nigeria (SON) are doing with their declarations. Similarly, they could actually interact with these agencies under NICIS II.

The new software had earlier been launched at Lilypond Terminal, Port and Terminal Multi-services Limited (PTML) and Tin Can Customs Commands.

Disruption

However its failure has affected cargo clearance at the ports in Lagos, Tin Can Island, and Kirikiri Lighter Terminal (KLT) twice this month during a heavy downpour.

The disruption was more pronounced at Lagos Port, which handles the largest imports just two weeks when it migrated to the new platform after its trial at Lilypond, PTML and Tin Can commands.

Challenges

Speaking on the challenges, the Assistant Comptroller of Customs in charge of Customs Processing Centre (CPC), Apapa command, Yahaya Muktar highlighted some of the challenges the command had faced since the NCIS II took off two weeks ago, namely –

  • that the migration from ASYCUDA system to NCIS II platform had caused a little disruption in revenue generation, however he said that the command had caught up on what was initially lost to the mixed up; and
  • that the recent windstorm also contributed to the teething problems experienced at the command.

He explained that the service had not been able to access any work because of the server failure.

For the first week, there was no revenue collected. In the second week, when NCS got acclimatised to it, NCS collected N4.3 billon in a day which has now made up for the three days where no revenue was collected.

At the moment, the Lagos Port had only one scanning machine and that this was not adequate for the backlog of pending containers to be cleared. It was also confirmed that scanners were not working in some port terminals (Tin Can).

Requests for inspection were not being triggered properly resulting inspections not being completed.

Issues are also being experienced with debit notes resulting in importers being billed twice.

Many users were reluctant about using the new IT platform in the light of all the difficulties.

The challenges experienced range from network to various hardware and software technical issues. The NCS’s technical partner, Webb Fontaine is working with the implementation team to ensure normal resumption of customs processing for trade.

Source: New Telegraph Online, original article by Bayo Akomolafe, 30 May 2018

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Companies that have been certified by the Singapore Customs for adhering to robust security practices can now enjoy a faster customs clearance process for goods that they export to Australia, the agency for trade facilitation and revenue enforcement said on Thursday.

In addition to the faster clearance process, certified Singapore firms will also be subject to reduced documentary and cargo inspections. The same will be applied to Australian companies that are certified by the Australian Border Force (ABF) for goods that they export to Singapore.

The move was recognised under a Mutual Recognition Arrangement (MRA) of Authorised Economic Operator programmes signed by Singapore Customs and the ABF on May 31 that aims to foster closer customs collaboration and elevate bilateral trade ties between the two countries.

The MRA comes under the Comprehensive Strategic Partnership signed between Singapore and Australia in 2015. In addition, Singapore is the first Asean country to sign an MRA with Australia.

In its media statement on Thursday, Singapore Customs said: “The Australia-Singapore MRA recognises the compatibility of the supply chain security measures implemented by companies certified under Singapore Customs’ Secure Trade Partnership (STP) programme and the trusted companies of the ABF’s Australian Trusted Trader programme.”

The agreement was signed on Thursday by Singapore’s director-general of customs, Ho Chee Pong, and the commissioner of ABF and comptroller-general of customs, Michael Outram, in Singapore.

Mr Ho said: “The signing of this MRA reinforces the commitment of both our customs administrations to maintain the security of regional and global supply chains, and to facilitate legitimate trade undertaken by Authorised Economic Operators in both countries.

“As major trading partners, I am confident that this new MRA of our respective Authorised Economic Operator programmes will bring about much benefit to our businesses and boost bilateral trade.”

The signing of the Authorised Economic Operator-MRA will further strengthen closer cooperation at the borders and smoothen the passage of goods between our two countries of trusted traders.

Source: The Business Times (Singapore), original article by Navin Sregantan, 31 May 2018

 

Korea Customs Service logoThe Korea Customs Service (KCS) has developed a customs clearing system powered by blockchain technology and artificial intelligence to prevent fraud and smuggling in South Korea and is enlisting importers and exporters to try out the new system.

The initiative is a response to a huge import/export and e-commerce boom in the country. The commissioner of the Korea Customs Service (KCS) Kim Yung-moon said back in March: “Adopting new technologies to respond to the ‘fourth industrial revolution’ is an overriding agenda for us as trade form is becoming more complicated.”

The blockchain-based customs clearance platform has enlisted five groups and over 50 exporters as well as five working groups and ten Singapore- and Vietnam-based importers for the test-run.

Improving Certificates of Origin

According to KCS, the volume of trade transactions involving imports and exports in South Korea grew eight-fold from 3 million to 27 million from 1990 to 2017. The new volumes call for improved efficiency in customs clearing. The new blockchain-based data analysis center is expected to increase accuracy and timeliness as well as helping to identify contraband and improve the issuance of Certificates of Origin (CO). A Certificate of Origin is a standard requirement in the shipping industry that contains information about a product’s country of origin and destination and helps to determine the product’s categorization for import tariffs.

The system will use X-rays powered by artificial intelligence to screen and examine high-risk items. It will use blockchain technology to run information networks to connect nodes on the supply chain and to share real-time information that will help in preventing cross-border fraud.

Should everything go according to plan, the Korea Customs Service (KCS) will eventually apply the technology to all its other services. The outcomes of the test will be laid bare this coming Tuesday at Seoul’s central customs office.

Source: Bitrates.com, article by Tom Nyarunda, 14 May 2018

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WCO Academy” is the online platform where representatives from the trade community are able to access e-learning courses, webinars, books and news.

The WCO has already developed 23 Customs-focused e-learning courses covering more than 500 hours of e-training on major international instruments, topics and concepts that contribute to enhancing the work of Customs officers from across the globe, directly at their work place.

Specific courses are now available to company staffers and University students, which have been suitably adjusted to meet their needs.

Aimed at building the Customs skills of current and future trade professionals, as well as further enhancing their work performance, the WCO Academy is the ideal platform for the private sector to gain in-depth knowledge and specialized information from the WCO. Source: WCO