FSVP Introduces New Broker Compliance, Identity Theft Concerns, Industry Officials Say

Failure to accurately report data elements required by the Food and Drug Administration’s Foreign Supplier Verification Program could also have compliance implications for customs brokers, Domenic Veneziano, president of Veneziano Consulting, said during a webinar hosted by the National Customs Brokers & Forwarders Association of America on May 12 (here). Brokers that file inaccurate data could be prevented from entering food under FDA’s Voluntary Qualified Importer Program, given that VQIP importers must use brokers that passed their most recent filer evaluation (see 1611100028). As a result, it is “extremely important” that brokers get accurate information from their clients, Veneziano said. A presentation from the webinar is available (here).

One way brokers can protect themselves is by entering into a written agreement with the importer of record that holds the importer responsible for any information transmitted, said Veneziano, who until recently led FDA’s Division of Import Operations (see 1607270026). That way, if FDA conducts an inspection, the agency will understand that the data transmitted by the broker was only what was provided by the importer of record, and will hold the importer responsible for ensuring who the FSVP importer is at time of entry, Veneziano said. FDA plans to start FSVP inspections, including “initial importer” inspections of FSVP importers identified on entry documentation, in fiscal year 2017, he said. The agency hasn’t started yet, and is still in the process of developing a training program for agency staff. Training is expected to begin in June, he said.

Entry filers could see a few hiccups for food imports once FSVP filing becomes mandatory for certain importers on May 30, said Stuart Schmidt of UPS. CBP will not accept the mandatory data elements for FSVP importers until May 30, so any filers that pre-file their entries and transmit them to CBP can’t transmit prior to May 30, he said. Any brokers updating cargo release transmissions after May 30 will have to add the FSVP importer data elements. Filers may experience a “little pain” for the first couple of days after May 30, and “may get some rejects” where the FSVP importer is not properly identified, Schmidt said.

Once filing is required, one of the data elements filers will have to transmit is the FSVP importer’s DUNS number. The agency recently said it will accept transmission of “UNK” if the DUNS number is unknown because the importer hasn’t yet obtained one (see 1705100028). FDA will then call the FSVP importer and ask why it doesn’t yet have it, though the agency will likely be constrained by a lack of resources, said Kristen Spotz of the Grocery Manufacturers Association. In cases in which the FSVP importer stores its records in a separate facility, FDA recommends that the filer transmit the DUNS number of the facility where the records are stored, not that of the FSVP importer’s main address, Schmidt said.

FDA plans on issuing guidance that says that when there are multiple buyers associated with a shipment, there can be an agreement between the buyers that one of them will act as the FSVP importer, Veneziano said. Entities that only consolidate a shipment, like Canadian grain consolidators, are not considered to be suppliers under the FSVP regulations, he said. Rather, in the case of the grain consolidator, the supplier would be the grain farms that send their products to the consolidator. But the consolidator can act as a conduit for supplier verification information to the FSVP importer. FSVP importers may also use the consolidator as a “qualified individual” to satisfy FSVP requirements, or rely on testing performed by the consolidator for supplier verification purposes, Veneziano said.

One concern food importers have is the possibility of “identity theft” of their role as FSVP importer, Schmidt said. For example, once an FSVP importer gives its DUNS number to an importer of record for a given shipment, that importer of record may potentially use that FSVP importer’s information on a shipment actually imported from another party, he said. Some are predicting this issue “will happen on some levels,” potentially causing the importer to be placed on import alert or affecting the filer’s review, Spotz said. Veneziano said FDA would have trouble justifying the import alert, given that the FSVP importer had no control over the situation. Rather, the agency would likely conduct a “traceback” to find the responsible party in the supply chain, Veneziano said.