Why It Matters
Foreign importers of record must use a security-validated customs broker or be validated themselves, and brokers must verify their clients' U.S. status, as the Homeland Security Department imposes the new requirements.
The department estimates that 32% of foreign importers of record cannot keep importing unless they switch brokers or become validated under the Customs Trade Partnership Against Terrorism (CTPAT) program.
Until now, a foreign company could become an importer of record by submitting an identity form to get a number from U.S. Customs and Border Protection (CBP), or by using an Internal Revenue Service employer identification number, with no CTPAT or broker requirement. CBP says the rule implements Section 2 of Executive Order 14411, "Strengthening Customs Enforcement," according to CBP's reference guide.
A foreign importer of record "may not enter merchandise for consumption except pursuant to the requirements" the rule sets out, according to the regulatory text.
- A foreign importer that is CTPAT validated may make entry itself or hire a licensed customs broker.
- A foreign importer that is not validated must designate a licensed broker who is CTPAT validated to make entry or act as importer of record.
- Every importer must declare at filing whether it qualifies as a U.S. importer of record. An individual qualifies as a U.S. citizen or lawful permanent resident. An entity must be located in and organized under U.S. law, and either have at least 51% of its beneficial owners be U.S. citizens or permanent residents who control it, or directly own a significant amount of unencumbered U.S. real property.
CBP says it is not adopting the full ban on informal entries by foreign importers that the executive order directs. It says it will monitor informal entries and may impose a full prohibition later if it identifies risks to revenue, national security, or public health and safety.
Before declaring a client a U.S. importer of record, a broker must request and review records such as proof of citizenship, corporate charters, financial statements, purchase receipts or documents of title. Brokers must keep those records five years.
CBP may require entry summaries and duty payments before release, and may end immediate delivery privileges, for an importer that inaccurately declares U.S. status. A broker that violates the customs penalty statute may face that penalty or other enforcement, including license suspension or revocation.
Today, 19 CFR 111.29 is a single paragraph requiring brokers to exercise due diligence in financial settlements, correspondence and records. CBP estimates 0.4% of foreign importers of record are CTPAT validated and 68% already use CTPAT-validated brokers.
- Of active brokers, 21% are CTPAT validated and 78% are not. CBP estimates 1,401 non-validated brokers served a foreign importer.
- CBP estimates non-validated brokers would lose 12.5% of clients and validated brokers would gain 9.3%.
- CBP estimates a validation application takes 20 hours, at an average cost of $777.60.
- CBP estimates its own costs at $12,122,871.
CBP cites unpaid bills as its reason. It reports $1,015,627,712 in principal owed by non-validated foreign importers as of Feb. 6.
The agency issued the rule without a proposal or prior comment. It cites the foreign affairs exception and says advance notice would let foreign importers "flood the market" with illicit merchandise and let shell companies open new accounts to evade the requirements.
CBP asks commenters whether its approach is appropriate and whether it should instead fully prohibit informal entries by foreign importers or brokers acting for them.
The Bottom Line
The interim final rule takes effect Jan. 5, 2027. Comments are open on regulations.gov under docket USCBP-2026-1387, which lists Jan. 6, 2027 as the end date. Brokers may ask for delayed compliance with the verification duty before Jan. 5, 2027, and all brokers are expected to comply fully by May 6, 2027.
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