WEBVTT

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It really is the perfect storm.

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On the one hand, this is a rapidly
changing enforcement environment.

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We’re seeing new tariffs,

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as well as the tariffs
moving through the courts.

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On the other hand,
it is a clear enforcement priority

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for the administration.

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In May of this year, the
DOJ’s Criminal Division issued

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new guidance identifying
tariff and customs fraud

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as its number two
enforcement priority.

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And they’ve been really putting
that plan into action.

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They’ve reorganized agencies
to prioritize tariff

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and customs fraud.

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They expanded the Whistleblower
Rewards Program

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to reward whistleblowers
who report customs and trade fraud.

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And the DOJ established
a cross-agency task force

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focused on tariff fraud

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and making sure there’s
robust enforcement in this area.

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So it really is the perfect storm.

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What do I mean by customs fraud?

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We’re talking about an intentional
act to deceive or defraud

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the U.S. government.

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Here we’re really talking about CBP,

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or U.S. Customs and
Border Protection, to

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reduce the amount of customs

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or duties you owe, or to avoid
customs and duties altogether.

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So we’re talking more than just
mistakes on your paperwork,

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but an intentional act with
mens rea or intent.

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What does that look like
in practice?

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In reality, it’s really just lying.

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And there are a lot of ways you can
lie on your customs paperwork.

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You could lie about
the classification of the goods,

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so a different code on the HTSUS.

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You could lie about the
country of origin.

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You could misrepresent
the value of the goods.

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So there are many ways
that you can commit customs fraud.

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But in the end, it’s an intentional
act to deceive the U.S. government.

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Companies that engage in customs
or tariff fraud

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can face
significant consequences,

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including civil
or criminal penalties.

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This includes charges

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both against companies
as well as individual bad actors.

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And we’ve actually seen the DOJ

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bring charges against individuals

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in a number of
recent enforcement actions.

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A key statute that we're keeping
an eye on is the False Claims Act,

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which comes with treble damages
and can cause

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significant consequences
for companies.

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We’re also looking out
for whistleblowers,

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whether they’re calling the DOJ,

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or reaching out to CBP,

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whistleblowers and whistleblower

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law firms that are out there
acting on contingency, saying,

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I will take your case for free

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means they’re going to be

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more and more whistleblowers,
which means

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more and more investigations
and risk for companies.

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Now is the time
for companies with U.S.

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import activities

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to assess their exposure
to customs and tariff fraud,

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as well as their
control environment.

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I would really think about it
in those two buckets.

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How is your company

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impacted by this rapidly
changing tariff environment?

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And second, how does your control
environment stack up?

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We’re not just talking
about policies and procedures.

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We’re really thinking about this
as a fraud compliance program.

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So all of the elements
you would expect to see

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similar to what you
might see in a DOJ

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evaluation of corporate
compliance program.

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So tone at the top,

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third party risk management,

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and, ideally, really moving toward
data analytics and monitoring

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to issue spot and detect misconduct
and fraud in real time.

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I’m Erin Brown Jones,
a white collar

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defense and investigations partner

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and Co-Deputy
Office Managing Partner

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of Latham’s Washington, DC office.

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I’ve been working with clients
for 15 years on

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compliance, enforcement, and investigation matters,

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and I love working with clients
to be proactive

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and get in front of
compliance matters

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before they become real issues.