Broker Compliance: practice questions

ZX Customs Brokers, Inc. (ZX) is a customs broker that is a corporation. George Forest, an individually licensed customs broker, is ZX’s Vice President of Compliance and is the qualifier for ZX’s license and national permit. On May 1, 2025, the Executive Director, Office of Trade, CBP accepts Mr. Forest’s voluntary suspension of his individual license for one year effective May 5, 2025 due to health issues. ZX’s Import Manager, Jayne Smythe, is an individually licensed broker, but she is not a duly appointed officer of ZX. Which of the following statements is FALSE?

1. ZX may notify CBP that it is appointing Import Manager Smythe as its national permit qualifier and continue conducting customs business until the annual permit expires on December 31, 2025. ✓
2. ZX may make a written voluntary offer of suspension of its broker’s license and permit for one year to accommodate Mr. Forest’s voluntary suspension of his license and discontinue conducting customs business during the suspension period.
3. ZX may appoint Import Manager Smythe as Vice President of Import Compliance, notify CBP that Ms. Smythe will be the new license and permit qualifier effective May 5, 2025, and continue conducting customs business.
4. Prior to September 2, 2025, ZX may hire Dr. Hu, an individually licensed broker, as its Vice President of Import Compliance. It can then designate Dr. Hu to act as the corporation's new license qualifier and Import Manager Smythe to serve as its new national permit qualifier. After informing CBP of the appointments and complying with all other relevant requirements, it may continue conducting customs business.

Why: Statement A is false. A national permit is not an annual permit that lapses on December 31, and simply naming Ms. Smythe as permit qualifier does not cure the corporation's license problem: under 19 CFR 111.11(c)(2) a corporation must have at least one officer who is a licensed broker to qualify for its license, and Mr. Forest's voluntary suspension under 111.52 leaves ZX without one. The other three statements are consistent with the regulations, because 19 CFR 111.19 requires only that a national permit qualifier be a licensed broker employed by the corporation (not an officer), and 111.45(a) gives ZX 120 days to install a licensed officer as license qualifier.

After filing an application for a license under 19 CFR 111.12, a broker is convicted of a misdemeanor involving embezzlement that has no connection to any import transaction. Under 19 CFR 111.53, may CBP initiate suspension or revocation proceedings?

1. Yes, embezzlement is an enumerated offense ✓
2. No, the offense did not involve importing
3. No, only felony convictions are grounds
4. Yes, but only if a client suffered loss

Why: 19 CFR 111.53(b)(3) makes a conviction, at any time after the filing of a license application under 19 CFR 111.12, of any felony or misdemeanor involving embezzlement (along with larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, fraudulent conversion, or misappropriation of funds) a ground for proceedings. The answer that the offense must involve importing describes only 19 CFR 111.53(b)(1), one of three alternative branches, and the felony-only answer overlooks that 111.53(b) reaches misdemeanors as well.

Which ONE of the following activities may qualify for one credit of continuing broker education?

1. Viewing a one-hour recording of a CBP webinar offered to prepare registered CBLE examinees for exam-day procedures.
2. Attending a one-hour discussion session on the potential use of artificial intelligence in tariff classification. The session is offered during an in-person trade workshop near the Port of Baltimore and is attended by several CBP employees. The discussion leader has stated that the event organizers intend to seek approval for continuing broker education credit for the discussion session after the session concludes.
3. Giving a one-hour lecture on duty refund opportunities for educational institutions at a convention for educators and university procurement officers. The lecture and the convention have been approved for continuing broker education credit by a CBP-selected accreditor, prior to being held. ✓
4. One hour spent preparing subject matter for a self-guided, five-month long online course on valuation that commenced at the start of the year. The course culminates in a retention test and has been approved for continuing broker education credit by a CBP-selected accreditor.

Why: 19 CFR 111.103(a)(1)(ii) makes a non-government activity qualifying only if a CBP-selected accreditor approved it for credit before it is provided, and 111.103(b)(1)(i) allows half a credit for each full 30 minutes spent presenting as an instructor, discussion leader or speaker - so a one-hour pre-accredited lecture at an accredited convention yields exactly one credit. Option B fails because approval was to be sought only after the session ended. Option D fails because the preparation allowance in 111.103(b)(1)(ii) is limited to activities described in 111.103(a)(2)(i) or (ii), and a self-guided online course culminating in a retention test is an (a)(2)(iii) activity. Option A fails on subject matter rather than provider: 111.103(a)(1)(i) accepts any training offered by CBP without a relevance test, but a webinar on CBLE exam-day procedures for registered examinees is not education in customs business as that term is defined in 19 CFR 111.1, which is what the continuing broker education requirement of 19 CFR 111.102 is directed at.

A freight forwarder is referring an import client to a customs broker with an expectation of receiving a referral fee. Which ONE of the following statements is legally TRUE with respect to their relationship?

1. The customs broker may execute a customs power of attorney with the importer via the freight forwarder, via another third party, or with the importer directly to transact customs business for that importer.
2. The importer must be notified in advance by the freight forwarder or broker of the name of the broker with whom the freight forwarder is doing business for the handling of the importer’s Customs transactions. ✓
3. The agreement between the freight forwarder and the customs broker may stipulate that the importer may only communicate with the broker through the freight forwarder.
4. The broker and freight forwarder may not enter into an agreement such that the freight forwarder, as an unlicensed person, benefits from the broker’s services rendered to and fees earned from the importer.

Why: 19 CFR 111.36(c)(1) permits a broker to compensate a freight forwarder for a brokerage referral only if 'the importer or other party in interest is notified in advance by the forwarder or broker of the name of the broker selected by the forwarder,' which is exactly what option B states. Option A fails under 111.36(c)(3), which requires the customs power of attorney to be executed directly with the importer of record and not via a freight forwarder or other third party; option C fails under the same provision, which forbids any term that prevents direct communication between the importer and the broker; and option D fails under 111.36(b), which bars agreements under which fees or benefits from services rendered to others inure to an unlicensed person.

Which of the following statements is TRUE? For the purposes of this question, an organization means a partnership, association, or corporation.

1. An applicant for a national permit applying on behalf of an organization must be an individually licensed customs broker employed by the organization and such individual will also be responsible for exercising responsible supervision and control over the activities conducted under that national permit. ✓
2. An applicant who obtains a passing grade on the examination for an individual broker license may apply for a national permit and the permit will be issued if the broker license is denied as long as the requirements of 19 CFR 111.19(b)(2) - (11), (c) and (d) are met.
3. An organizational broker must be issued a district permit by the processing Center before the organization may apply for a national permit for the purpose of transacting customs business in accordance with the requirements in 19 CFR Part 111.
4. An employee of a broker may, acting on his or her own behalf and without an individual license, while on the employer's premises, execute powers of attorney between the employee and clients of the employee and use the employer's facilities to conduct customs business on behalf of those clients.

Why: 19 CFR 111.19(b) states that an applicant applying for a national permit on behalf of a partnership, association, or corporation must be a licensed broker employed by that organization, and 111.19(b) and (f) both provide that the applicant/qualifier will exercise responsible supervision and control (as described in 111.28) over the activities conducted under the permit. The other options fail: a national permit cannot issue if the underlying licence is denied; district permits were eliminated - 111.19(a) makes the national permit the sole permit for transacting customs business throughout the customs territory; and 111.2(a)(2)(ii) excuses an employee from licensure only when acting *solely for the employer*, not when taking powers of attorney from his or her own clients.

A broker receives a written CBP demand for entry records on May 2 and concludes that it cannot assemble them within the period allowed. It wants additional time. What governs its request?

1. The request must reach CBP before the due date, with an explanation ✓
2. The request may be filed at any time and automatically stays any penalty
3. The request must be filed within 30 days after the due date has passed
4. The request must be made orally and confirmed by CBP in writing later

Why: 19 CFR 163.6(a) permits a written or electronic request to Customs for approval of a specific additional period of time, but conditions it twice: the request must be received by Customs before the applicable due date for production of the records, and it must include an explanation of the circumstances giving rise to the request. The paragraph is emphatic that filing the request is not itself protection - the mere fact that a request was submitted shall not by itself preclude imposition of a monetary penalty or other sanction for failure to timely produce the records. Protection arrives only if the request is approved and the records are produced before that additional period expires. The baseline production period under the same paragraph is 30 calendar days from receipt of the demand, or any shorter period Customs may prescribe when the records are needed in connection with a determination regarding admissibility or release of merchandise.

Which ONE of the following four scenarios best demonstrates proper compliance with a record examination request? Assume that duly accredited representatives of the U.S. Department of Homeland Security (DHS) made each of the requests below.

1. A customs broker receives a request to inspect records relating to a client that the broker stopped working with over five years ago. The broker has maintained the requested records but informs DHS that they will not make the records available for inspection because the period of retention has ended.
2. A customs broker receives a request to inspect records relating to a particular entry of merchandise from an entry made two years ago. The broker mails the original paper version of the requested records to DHS, postmarked 60 calendar days after the request was made.
3. A customs broker receives reasonable notice of a site visit. The notice includes a request to inspect records pertaining to a client of the brokerage. During the site visit, the broker informs DHS that the records are kept off-site and will not be available for inspection during the visit. The broker states that they will send the records electronically within 30 calendar days of the visit.
4. A customs broker receives a request to inspect a customs broker’s records relating to an unused merchandise drawback claim. The request specifies that the broker has up to 120 calendar days to provide the requested records. On the 45th calendar day from the request, the broker sends the original electronic version of the requested records to DHS. ✓

Why: 19 CFR 111.25(b) requires the broker's designated recordkeeping contact to make all records available to DHS "within thirty (30) calendar days, or such longer time as specified by DHS." In option D the request itself specified 120 days and the broker produced on day 45, so the response is timely. Option B exceeds the 30-day default with no longer period specified; option C fails 111.25(a), which requires records be maintained so they "may readily be examined" and be made available upon reasonable notice; and option A ignores both the five-year retention period in 111.23(b)/163.4(a) and 111.25(a)'s requirement that records be produced during any longer period in which they remain in the broker's possession.

A broker that is a corporation has had no officer holding a valid individual broker's license for a continuous period of 130 days. Under 19 CFR 111.45, what is the consequence?

1. Assessment of a monetary penalty on the officers
2. Revocation by law of the license and its permit ✓
3. Revocation by law of the national permit only
4. Suspension of the license for a specified time

Why: 19 CFR 111.45(a) provides that a corporate broker's failure, during any continuous period of 120 days, to have at least one officer holding a valid individual broker's license results in revocation by operation of law of both the license and the national permit issued to the corporation. The “national permit only” answer describes the separate 180-day rule in the same paragraph for failure to employ a national permit qualifier; at 130 days the 120-day license trigger has already been passed.