Administrative Monetary Penalties
MILLAR KREKLEWETZ LLP is a boutique Canadian law firm with lawyers who have significant expertise in customs and trade matters involving Administrative Monetary Penalties under Canada's customs laws.
The following is a short introduction to Administrative Monetary Penalties under Canada's Customs Act.
Administrative Monetary Penalties
Canadas customs law regime implemented an Administrative Monetary Penalty System AMPS for short on October 7, 2002. Since that time, AMPs assessment have become an important part of Canada's customs compliance regime, and the AMPs system may be understood as follows.
The Mechanics of AMPS
For Canada, AMPS is an unprecedented and comprehensive sanctions regime, aimed at establishing a graduated civil monetary penalty system instead of the all of nothing approach under the former regime, which could impose draconian penalties (e.g., seizure of goods, or penalties amounting to the full value of the goods) for even the most minor of customs errors.
Scope of AMPS
AMPS penalties apply to contraventions of Canadas customs laws (which are principally found in the Customs Act, the Customs Tariff, the Special Import Measures Act, and their associated regulations).
Currently, AMPS penalties may be imposed for over 350 different infractions, ranging from simple mis-classification of goods, to non-revenue related statistical errors.
AMPS penalties can be applied against owners or importers of goods, as well as against exporters, travelers, carriers, customs brokers, and warehouse licensees. Penalties may be assessed at a flat rate or on a graduated basis or as a percentage of the value for duty of the goods involved in the contravention.
Graduated Penalties
In most instances, AMPS will impose a graduated penalty for specific infractions. That is, the monetary penalties will be imposed in proportion to the type, frequency and severity of the infraction. These graduated penalties will take the compliance history of the person into consideration.
Applicability of Other Penalties & Interest
It is significant to note that an AMP may be assessed in addition to any other penalty (e.g., seizure), interest, and criminal prosecution.
Notice of Penalty Assessment
Once assessed an AMP, a person will receive a Notice of Penalty Assessment, setting out the penalty number, the amount of the penalty, the penalty calculation as well as the as well as the contravention and the legislative authority. The AMP becomes payable on the day the notice of assessment is served on the person.
Appealing an AMP Penalty
Once an AMP is assessed, a person generally has four options (which are not mutually exclusive): (1) pay the assessment; (2) request corrective measures; (3) appeal the assessment; or (4) enter into a Penalty Reduction Agreement.
The corrective measures option under section 127.1 of the Customs Act allows the Minister to cancel or reduce an AMP penalty (or other penalty for that matter) within 30 days of the assessment, if there was no contravention or if there was an obvious error in the amount assessed.
The Penalty Reduction Agreement option may be used to reduce or eliminate the penalty assessed where a person has been assessed an AMPS penalty totaling $5,000 or more, as a result of their Customs Information System.
AMPS Defences
It is noteworthy that AMPS penalties are automatically imposed, despite reasonable care efforts to comply (unlike the situation in the U.S., where, to the extent that a trader can demonstrate that they did exercise reasonable care, they will not be subject to a penalty). Under the AMPS regime, even where a person has exercised reasonable care to comply with customs laws, they may still be subject to a penalty (there is some suggestions, however, that the Canada Border Services Agency may consider a due diligence defence).
Further Help with AMPs
Millar Kreklewetz LLP is well-placed to provide assistances with all customs related matters, and persons facing AMPs and other customs sanctions, or simply wishing to better understand their customs obligations are encouraged to use the form on this page to contact us for specific legal advice applicable to their unique fact situation.