When is the forwarder liable for contraband imports?

With stories about container loads of contraband being seized by police or customs continually appearing in the local and international press, FTW has been posed an interesting question: “Is the forwarding/clearing agent liable?” The answer, however, is not a simple yes or no as we discovered when we put the question to Dave Watts, maritime director of the SA Association of Freight Forwarders (Saaff). First off, he told FTW, it’s the importer of the goods that is the one who is liable to get nailed for importing contraband. Or “smuggling” if you want to put it simply. Now that doesn’t just mean the cargo owner, according to the new Customs Act – which has been promulgated, but won’t come into operation until all the necessary “rules” are put together by SA Revenue Service (Sars) customs. “It’s actually just about everybody and their grannies,” said Watts. So that would include forwarding/clearing agents? Said Watts: “As there is no definition of ‘Freight Forwarder’ in the new act it is therefore reasonable to assume that the definition of ‘Carrier’ which reads: ‘a shipping line, airline or other person carrying on business by transporting goods or travellers by sea or air for reward’ would often include freight forwarders.” But, right throughout the act – although forwarders or clearing agents are not referred to – there is constant reference to customs brokers. Aren’t they the same as forwarders, and aren’t they included as ‘importers’? “It is apparent that when considering the new act,” Watts replied, “we must understand there is a distinct difference between a customs broker and a freight forwarder – even though, more often than not in SA, they operate in the same entity. “The new act clearly excludes the ‘Customs Broker’ from the definition of ‘Importer’ when he is acting as such for an importer. However, not where a broker is acting as ‘registered agent’ of a foreign entity and submits a clearance for that entity.” Watts suggested that you could not simply use definitions to conclude that, in a specific case, one party or another would be considered liable for non-compliance – such as smuggling or some other serious offence. “It appears to me,” he added, “that in a case where the broker can prove that when making a clearance declaration he had no reasonable way of knowing that the goods were contraband and that he acted in accordance with the importer’s written clearance instruction (another legislated requirement in the act), he would not be found liable.” But Watts also points out that, regardless of the above, brokers who find themselves declaring goods that ultimately fall foul of the act may well still be exposed to costs – such as overstay, storage and demurrage etc. This would be particularly true if the client decided to “run for the hills” once his nefarious activities are uncovered. It makes for one very simple rule in the business of both clearing and forwarding, Watts said. That is: “Know Your Client!”