CustomsBrokerLicenseExam

Home / Past exams / October 2024 / Question 12

October 2024, question 12

Broker Compliance · Penalties, recordkeeping and prior disclosure

Sam Sly's customs broker license was revoked by operation of law for failure to file a triennial status report and pay the fee. Sam thought that his employer ABC Brokerage (ABC) filed his report and paid the fee on his behalf, so he ignored the warning letter from CBP. In addition to his work at ABC, Sam completes freelance jobs classifying merchandise and filling out entry documents, but not filing them with CBP, for clients he obtains from a website that brings service providers together with businesses who buy freelance services. CBP discovers Sam's side business, determines that Sam is advertising publicly that he is a licensed customs broker, and discovers that he has conducted customs business for five importers of commercial goods after his license was revoked. CBP sends a penalty notice to Sam for conducting customs business without a license for $10,000.00. This is Sam's first penalty, and he has the ability to pay the fine, but he has requested mitigation claiming that he did not know his license was revoked. Based upon the guidelines in Appendix C to 19 CFR Part 171, will CBP mitigate and, if so, to what amount?

  1. Yes, CBP will mitigate to $250.00.
  2. Yes, CBP will mitigate to $1,000.00.
  3. No, CBP will not mitigate the penalty.
  4. No, CBP will not mitigate and will raise the penalty to $30,000.00 because there were five violations.
Show the answer and walk-through

CBP's answer: C. C: No, CBP will not mitigate the penalty.

Under the penalty guidelines, no mitigation is given for conducting customs business without a license unless the violator can show an inability to pay. Sam has the ability to pay, and the guidelines say intent is not an element of the violation, so his claim that he did not know does not change that. CBP will not mitigate (C). The several jobs are treated together rather than raising the penalty past $10,000.

No mitigation will be afforded for any violation involving conducting Customs business without a license unless the violator can show an inability to pay such penalty. 19 CFR Part 171, Appendix C
Intent to violate the law is not an element of this violation. 19 CFR Part 171, Appendix C

Search for: mitigation conducting customs business without a license

CBP's key cites: 19 CFR Part 171

Question and key from CBP's October 2024 exam and answer key. The walk-through is ours; quotes are from the pinned editions in the reference viewer (HTSUS 2026 Basic, 19 CFR 2025 edition).