Home Discussion Broker Compliance Quiz 1, Question 8

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  • Deanna Schlieve
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    This Explanation does not cite a specific part of Title 19, could you provide an alternative?

    8. Question 1 point
    Generally, a broker’s license is required for which of the following transactions?

    A. entering a $200,000 necklace for one’s own account
    B. owner of goods admitting merchandise into a foreign trade zone
    C. clearing a vessel
    D. freight forwarder (nominal consignee) filing a TIB entry
    E. bonded carrier making entry for merchandise to be transported in bond

    Correct choice is: D
    Explanation: CFR 111

    admin
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    19 CFR § 111.1 Customs business. “Customs business” means those activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges. “Customs business” also includes the preparation, and activities relating to the preparation, of documents in any format and the electronic transmission of documents and parts of documents intended to be filed with CBP in furtherance of any other customs business activity, whether or not signed or filed by the preparer. However, “customs business” does not include the mere electronic transmission of data received for transmission to CBP and does not include a corporate compliance activity.

    § 111.2 License and district permit required.
    License –
    (1) General. Except as otherwise provided in paragraph (a)(2) of this section, a person must obtain the license provided for in this part in order to transact customs business as a broker.

    (2) Transactions for which license is not required –

    (i) For one’s own account. An importer or exporter transacting customs business solely on his own account and in no sense on behalf of another is not required to be licensed, nor are his authorized regular employees or officers who act only for him in the transaction of such business.

    (ii) As employee of broker –

    (A) General. An employee of a broker, acting solely for his employer, is not required to be licensed where:

    (1) Authorized to sign documents. The broker has authorized the employee to sign documents pertaining to customs business on his behalf, and has executed a power of attorney for that purpose. The broker is not required to file the power of attorney with the port director, but must provide proof of its existence to Customs upon request; or

    (2) Authorized to transact other business. The broker has filed with the port director a statement identifying the employee as authorized to transact customs business on his behalf. However, no statement will be necessary when the broker is transacting customs business under an exception to the district permit rule.

    (B) Broker supervision; withdrawal of authority. Where an employee has been given authority under paragraph (a)(2)(ii) of this section, the broker must exercise sufficient supervision of the employee to ensure proper conduct on the part of the employee in the transaction of customs business, and the broker will be held strictly responsible for the acts or omissions of the employee within the scope of his employment and for any other acts or omissions of the employee which, through the exercise of reasonable care and diligence, the broker should have foreseen. The broker must promptly notify the port director if authority granted to an employee under paragraph (a)(2)(ii) of this section is withdrawn. The withdrawal of authority will be effective upon receipt by the port director.

    (iii) Marine transactions. A person transacting business in connection with entry or clearance of vessels or other regulation of vessels under the navigation laws is not required to be licensed as a broker.

    (iv) Transportation in bond. Any carrier bringing merchandise to the port of arrival or any bonded carrier transporting merchandise for another may make entry for that merchandise for transportation in bond without being a broker.

    (v) Noncommercial shipments. An individual entering noncommercial merchandise for another party is not required to be a broker, provided that the requirements of § 141.33 of this chapter are met.

    (vi) Foreign trade zone activities. A foreign trade zone operator or user need not be licensed as a broker in order to engage in activities within a zone that do not involve the transfer of merchandise to the customs territory of the United States.

    Answer choice A is a transaction on one’s own account for which a license is not required under § 111.2(2)(i).
    Answer choice B is a foreign trade zone user engaging in activities within a zone that does not involve the transfer of merchandise to the customs territory of the United States which does not require a license under § 111.2(2)(vi).
    C is clearing a vessel which is a marine transaction that does not require a license under § 111.2(2)(iii).
    E is a bonded carrier transporting merchandise for another may make entry for that merchandise for transportation in bond without being a broker which does not require a license under § 111.2(iv).

    That leaves us D as the correct answer by a process of elimination. A Temporary Importation Bond is not covered under the exceptions in § 111.2.

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