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111.19 Permit, cont. Exception to district rule – if applicant can demonstrate tosatisfaction of CBP that he regularly employs at least oneindividual broker in a larger geographical area in which thedistrict is located and that adequate procedures exist forthat individual to exercise responsible supervision andcontrol over the customs business conducted in that district,CBP may waive the requirement for an individual broker inthat district. A request for a waiver must be sent to the portdirector in the district in which the waiver is sought. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.21

111.19 – National Permit A broker who has a district permit may apply for a nationalpermit to transact any customs business listed in111.2(b)(2)(i). Application must be filed with Office of International Trade,Customs & Border Protection, Washington, DC. Must includethe following: Applicant’s broker license number and date of issuance Address & telephone number of office designated as the office ofrecord for purposes of administration of provisions of Part 111 Name, broker license number, office address and telephonenumber of individual broker who will exercise responsiblesupervision and control over activities of applicant conducted undernational permit. Receipt indicating fees specified in 111.96 have been paid 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.22

111.21& 111.23- Recordkeeping 111.21 – Each broker must keep current in correct,orderly and itemized manner records of accountreflecting all his financial transactions as a broker.Must keep & maintain on file copies of all hiscorrespondence and other records relating to hiscustoms business. (Must also comply with 19 CFR163) Must also designate a knowledgeableemployee to be the contact for Customs forbrokerwide customs business and financialrecordkeeping requirements. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.23

111.23 Records must be maintained by broker in accordance with19 CFR 163 and must be maintained within the brokerdistrict that covers the Customs port to which they relateunless broker chooses to consolidate and receives approvalfrom CBP to consolidate in one location. Records of 111.21 must be maintained for 5 years from dateof entry except for powers of attorney. POA’s must beretained until revoked and revoked poa’s and letters ofrevocation must be maintained for 5 years after date ofrevocation or for 5 years after the date the client ceases tobe an “active client”. Records relating to merchandiseentered into a bonded warehouse must be maintained for 5years from the date of the last withdrawal of merchandiseunder the entry. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.24

111.24 Records confidential – records referred to in thispart and pertaining to business of clients servicedby the broker are to be considered confidential andthe broker must not disclose their contents or anyinformation connected with those records to anypersons other than those clients, their surety on aparticular entry, and the Field Director, Office ofInternational Trade, Regulatory Audit, the specialagent in charge, the port director, or other dulyaccredited officers or agents of the U.S., except onsubpoena by a court of competent jurisdiction 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.25

111.28 Responsible Supervision – every individual brokeroperating as a sole proprietor and every licensedmember of a partnership or licensed officer of acorporation that is a broker must exerciseresponsible supervision and control over thetransaction of its customs business. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.26

111.28 Employee information – each broker must submit in writing to thedirector of each port at which the broker intends to transact customsbusiness, a list of the names of the persons currently employed by thebroker at that port – must be provided upon issuance of permit orbefore conducting customs business at the port. Social security numberDate & place of birthCurrent home address & last prior home addressIf employed by the broker less than 3 years, the name & address of eachformer employer and dates of employment for the 3 yr period precedingcurrent employment with the broker. After initial submission, an updated list must be provided to Customs withthe status report required in 111.30. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.27

111.28 New employees – broker must submit the employee information for anynew employee within 10 calendar days after the new employee hasbeen employed by the broker for 30 consecutive days. Terminated employees - within 30 calendar days after the terminationof employment of any person employed longer than 30 consecutivedays, the broker must submit the name of the terminated employee inwriting to the director at the port at which the person was employed. Termination of qualifying member or officer – if an individual brokerwho is the qualifying licenseholder for partnership or corporationterminates employment with the firm, the individual broker mustimmediately provide written notice to the Assistant Commissioner whenemployment terminates and must send a copy of the notice to thedirector of each port through which a permit has been granted topartnership or corporation. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.28

111.28, cont. Change in ownership – if ownership of a broker changes andownership shares are not publicly traded, the broker mustimmediately provide written notice of that fact to theAssistant Commissioner and send a copy to the director ofeach port through which a permit has been granted. If change results in a new principal, CBP reserves the right toconduct a background investigation on the new principaland also has the right to reject the new principal (portdirector will notify if rejected). Broker will be givenreasonable time to remedy situation. “Principal” means any person having at least a 5% capital,beneficiary, or other direct or indirect interest in the business of thebroker. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.29

111.29 - Diligence Brokers must exercise due diligence in making financial settlements,answering correspondence, and preparing/filing records related tocustoms business. Payment of duty, tax or other debt owing to the Government for whichthe broker has received payment from a client must be made before thedate the payment is due. Payments received by a broker from a client after the due date must betransmitted to the Government within 5 working days from receipt bythe broker. Each broker must provide a written statement to a client accounting forfunds received for the client from the Government or received from aclient where no payment has been made, or received from a client inexcess of the Governmental or other charges properly payable as part ofthe client’s customs business within 60 calendar days of receipt. Nowritten statement is required if there is actual payment of funds by abroker. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.30

111.29, cont. Notice to client of method of payment – all brokersmust provide their clients with the followingwritten notice: If you are the importer of record, payment to the brokerwill not relieve you of liability for customs charges in theevent the charges are not paid by the broker. Therefore,if you pay by check, customs charges may be paid with aseparate check payable to the “US Customs & BorderProtection” which will be delivered to CBP by the broker. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.31

111.29, cont. This notice must be provided by broker as follows: On or attached to any power of attorney executed bythe broker to a client for a client on or after Sept. 27,1982. To each active client no later than Feb. 28, 1983, and atleast once at any time within each 12-month periodafter that date. “Active client” – client from whom broker has receivedpower of attorney and for whom broker has transactedcustoms business on at least two occasions within the12-month period preceding notification 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.32

111.30-Notification of changes Change in address – broker must immediately give written notice of newbusiness address to each director of each port affected by change.Individual brokers not actively engaged in transacting customs businessmust also notify CBP in status report of new non business address. Change in organization – partnership, association, corporation mustimmediately provide written notice of any of the following to thedirector of each port through which it has been granted a permit: The date on which a licensed member/officer ceases to be the qualifyingmember/officer and the name of broker who will succeed as qualifyingmember/officer Any change in Articles of Agreement, Charter, Articles of Incorporationrelating to the transaction of customs business or any other change in thelegal nature of the organization. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.33

111.30, cont. Change in name – a broker who changes his name, or proposes to operateunder a trade or fictitious name in one or more States within the district inwhich he has been granted a permit and is authorized by State law to do somust submit to Office of International Trade, CBP Headquarters evidence of hisauthority to use that name. Status report – each broker must file a written status report with CBP on Feb. 1,1985 and on Feb. 1 of each third year after that date. Must be accompanied byfee of 100 and filed with director for port in which license was delivered.Failure to file – if a broker fails to file report by March 1 of reporting year,broker’s license is suspended by operation of law on that date. By March 31 portdirector will transmit written notice of suspension to broker by certified mail. Ifbroker files required report within 60 calendar days of date of notice ofsuspension, license will be reinstated. If not, broker’s license will be revoked byoperation of law and broker will need to file a new application for license.Notice of revocation published in the Customs Bulletin. Custody of records – upon permanent termination of a brokerage business,written notification of name and address of party having legal custody ofbrokerage business records must be provided to director of each port wherebroker was transacting business. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.34

111.31 – conflicts of interest Broker who is former officer/employee in US governmentservice may not represent client before DHS in any matterto which broker gave personal knowledge or gainedknowledge of facts while government employee. Broker cannot knowingly assist, accept assistance from, orshare fees with a person employed by a client in a matterpending before DHS to which that person gave personalconsideration or gained personal knowledge of that matterwhile employed by the government. A broker who is an importer himself must not act as abroker for an importer who imports merchandise of thesame general character as that imported by the brokerunless the client has full knowledge of the facts. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.35

111.35 – acceptance of fees With respect to customs transactions, a brokermust not demand or accept from any attorney onaccount of any case litigated in any court of law oron account of any other legal service rendered byan attorney any fee or remuneration in excess of anamount measured by or commensurate with thetime, effort and skill expended by the broker inperforming his services. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.36

111.36 – Relations with UnlicensedPersons Employment by unlicensed person other thanimporter – when a broker is employed for thetransaction of customs business by an unlicensedperson who is not the actual importer, the brokermust transmit to the actual importer either a copyof his bill for services rendered or a copy of theentry, unless the merchandise was purchased on adelivered, duty-paid basis or unless the importerhas in writing waived transmittal of the copy of theentry of bill for services rendered. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.37

111.36, cont. Service to others not to benefit unlicensed person – except as discussed below,a broker must not enter into any agreement with an unlicensed person totransact customs business for others in such a manner that the fees resultingfrom the services go to the benefit of the unlicensed person. Relations with a freight forwarder – broker may compensate a forwarder forreferring brokerage business subject to the following conditions: The importer is notified in advance by the forwarder or broker of the nameof the broker selected by the forwarder for the handling of his Customstransactions; The broker transmits directly to the importer: A true copy of his brokerage charges if fees & charges are to becollected by or through the forwarder unless this is waived in writingby importer A statement of his brokerage charges and an itemized list of anycharges to be collected for the account of the forwarder if the fees &charges are to be collected through the broker 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.38

111.39 – Advice to Client A broker must not withhold information relative to anycustoms business from a client who is entitled to theinformation. He must also exercise due diligence toascertain the correctness of any information which heimparts to a client and must not knowingly impart to a clientfalse information. If a broker knows that a client has not complied with the lawor has made an error in or omission from any document,affidavit or other paper which the law requires the client toexecute, he must advise the client promptly of thatnoncompliance, error, or omission. A broker must not knowingly suggest to a client orprospective client any illegal plan for evading payment ofany duty, tax or other debt or obligation owing to thegovernment. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.39

111.42 – Relations with person whois notoriously disreputable Except as discussed below, a broker must not knowingly and directly orindirectly: Accept employment to effect a Customs transaction as associate,correspondent, officer, employee, agent, or subagent from any person whois notoriously disreputable or whose broker license was revoked for anycause or is under suspension or was cancelled with prejudice. Assist in the furtherance of any customs business or transactions of anyperson described above. Employ or accept assistance in the furtherance of any customs business ortransactions from, any person described above without approval of theAssistant Commissioner Share fees with any person described above Permit any such person to participate whether through ownership orotherwise in promotion or control of business of broker. CLIENT EXCEPTION – Broker is not prohibited from transacting customsbusiness on behalf of a bona fide importer who may be notoriouslydisreputable or whose license is under suspension/cancelled. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.40

111.45 – Revocation by operation oflaw If a broker that is a partnership, association, or corporation fails to have,during any continuous period of 120 days, at least one member of thepartnership, association or corporation who holds a valid individualbroker’s license, the license will be revoked by operation of law and anypermits issued will also be revoked. Assistant Commissioner or designeewill notify the broker in writing of impending revocation 30 calendardays in advance of revocation. If a broker who has been granted a permit for any additional districtsfails for any continuous period of 180 days to employ within that district(or region if exception granted under 111.19) at least one person whoholds a valid individual broker’s license , the permit will be revoked byoperation of law. In addition to revocation, additional sanctions including penalties forfailure to exercise reasonable supervision and control over conduct ofbusiness can be assessed. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.41

111.51 – Cancellation of license orpermit Assistant Commissioner may cancel a broker’slicense or permit “without prejudice” upon writtenapplication by broker if determined that theapplication was not made in order to avoidproceedings for suspension or revocation. Assistant Commissioner may cancel a broker’slicense or permit “with prejudice” when requestedby broker. Effect of “with prejudice” is the same asif license or permit had been revoked for causeexcept that it will not give rise to appeal. 2020 Sandler, Travis & Rosenberg, P.A. www.strtrade.com All rights reserved.42

111.53-Grounds for suspension orrevocation of license/permit Appropriate Customs official can initiate proceedings for suspension/revocation for any ofthe following reasons: Broker, in license/permit application has made false or misleading statements withrespect to any material fact or omitted to state in application a material fact that wasrequired, Broker has been convicted at any time after filing application of any felony ormisdemeanor which Involve the importation or exportation of merchandise Arose out of the conduct of cu

Conducting Customs Business 19 FR 111.1 & 19 US 1641 define "customs business" as those activities involving transactions with Customs: concerning the entry and admissibility of merchandise Its classification, valuation, payment of duties, taxes, or other charges collected by Customs Drawback of duties, taxes, or other charges