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October 2026, question 1

Broker Compliance · Broker licensing and duties

On January 31, 2021, ABC Imports (ABC) issued a power of attorney to XYZ Brokers, LLC (XYZ) granting XYZ the authority to transact customs business on behalf of ABC. Of the four choices below, which scenario describes a conflict of interest?

  1. An employee of XYZ has a personal friendship with an employee of ABC.
  2. An employee of XYZ imports merchandise of the same general character as ABC without ABC’s knowledge.
  3. XYZ has several clients that import merchandise of the same general character as ABC.
  4. XYZ imports merchandise of the same general character as its client after providing the client full knowledge of the facts.
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CBP's answer: B. B: An employee of XYZ imports merchandise of the same general character as ABC without ABC’s knowledge.

Section 111.31(c) bars a broker who is an importer from acting as broker for a client who imports merchandise of the same general character unless the client has full knowledge of the facts, and the same restriction applies when a broker's employee is an importer. In B, an XYZ employee imports similar merchandise without ABC's knowledge, so that is the conflict. A is a friendship, C is serving several clients, and D is covered by the full-knowledge exception.

The same restriction will apply if a broker's employee is an importer. 19 CFR 111.31(c)
unless the client has full knowledge of the facts 19 CFR 111.31(c)

Search for: importations by broker or employee

CBP's key cites: 19 CFR 111.31

Question and key from CBP's October 2026 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).