Regulatory Compliance Management Customs Essay


Discuss About The Customs Regulatory Compliance Management?



On the behalf of the government of the specific nation state the role of custom is to execute a plethora of management policies that deals with the business that takes place on the border. The functionality and accountability of customs administration differ from one nation state to another. Role of the customers executive ranges from collection from the proceeds, trade compliance and facilitation, prohibition of substances which are deemed to be illegal in the country, protection of cultural heritage and enforcement of intellectual property law. Globalization has directed companies from all over the world to set up places of operations like factories and offices around the world. As the economy of several countries opened up to the regulations and restrictions of international trade, customs administration garners more and more importance. With the increase in international trade in the recent years the environment of exchange has also changed exponentially in terms of pace, difficulty, size and level of trade, extensive technological advancement and revolution in global trading practices. Therefore, the changes have tremendously affected the role and accountability of the customs authorities around the world.

The idea of the customs is not to restrict but to filter, the policies and items that are against the rules of the country. Indulgence in international trade ensure a boost to the economy and allows the economy to grow and to gather more and more investors. The role of a gatekeeper is to restrict without understanding the inside matter with careful observation. The gatekeeper is doses not understand the nuances of policies and the items that are in the exchange rather they set a standard for allowing certain things and disallowing certain things. On the other hand, compliance management has an aspect of analyzing, speculating and reviewing an idea before discouraging or accepting it.


Risk management of a company is based on identifying a risk, analyzing the outcome and the impact this risk would have on the future and also the current operation of the business, then is the part where the management of the organization plans a strategic idea to reduce the impact of the investable or deflect the risk which is possible. This may include several market research and policies and decision making. After the plan has been implemented by the management it is also the duty to look after and monitor the after effects so as to be careful that the decisions are working on a positive note for the company (Chance & Brooks, 2015). A response should also be gathered from the customers and the internal members of the company to record the views for future recognition and identification of such risks and problems. Non-compliance is a risk that is faced by the company sometimes knowingly and sometimes unknowingly, to keep up with the ever changing international trade policies and decisions in the border force and customs, companies have to be very careful. The customs and the Australian government have come up with several ideas and reforms that behave like a risk based compliance management for the betterment and facility of the traders who operate within the borders of Australia (McNeil, Frey, & Embrechts, 2015).

Compliance risk

In the corporate governance set up the compliance management plays a very critical role. Compliance means to conform and to comply with rules, regulations, guidelines, standards and laws of the relevant body of governance. In an organization the compliance managers deal with the regulatory, financial and reputational risks that the company may face while performing the daily operations of the business. In many cases, ensuring compliance to rules and guidelines necessitate organizational changes as well pertaining to technological installations, oversight and audits of the books and records of the company. As such, compliance can be a major cost and organizational challenge in heavily regulated industries such as banking (Cohen, Krishnamoorthy, & Wright, 2015).

Compliance risk can be defined as the probable for losses and jurisdictional penalties due to the failure to comply with the rules and regulations of an organization or government bodies. Sometimes the business organizations that run fully based in the legal jurisdictions can also face compliance risk and this is where the importance of compliance management and efficiency becomes significant to the daily operations of the business. There are times that an organization faces a failure in compliance due to the possibility of management failures. Sustainability risk, heath of the workforce, quality of the new or diversified item, corrupt practices among the employees and also failure of taking up social responsibility can also build up in the company that further on becomes a compliance risk to the company. Any business organization that s legally set up in a country to operate is bound by some regulations of that country. Be it a home grown business organization or a multinational company. Compliance to all the customs regulations is mandatory for a company to operate within the economic environment of a country. The main role of an authority who is from the revenue department is to collect the taxes and duties payable in accordance with the law (Baxter, Bedard, Hoitash, & Yezegel, 2013).

Approach taken by a Customs administration to manage compliance

In order to manage and keep a check on the compliance management of a business organization, the customer’s administrators have a set of guideline. For example, the customs officers monitor the records of the company in order to understand that the company is following all the rules or regulations or not. The customs have a set of rules for each industry to operate accordingly and the company usually follows these rules in order to keep a harmonious situation the economy without conflict among the businesses operating in the same industry. Customs rule vary from nature of business to scale of business and the hold of the customs authority on the operations of the business also depends on the industry (Freund, 2016). For example, if a company is dealing with import and export of products then the involvement of customs administration will be much more than a handloom or textile industry. Business organizations usually think that a planned compliance audit is all that a company requires fulfilling the requirements for compliance. Hence compliance audits only provide a narrow view of the way compliance is handled within the administration of a company. Compliance management deals with an organization consistent and continuing compliance requirements. The solutions to the compliance requirements gathered by the management of the company should be customizable and should have the ability to expand with the vision of the organization. There are several punishments that the Customs body of Australia is able to impose for non-compliance of the rules and regulations. These penalties may vary according to the level of non-compliance of the rules and its effects on the trading (Boll, 2014).

Assessing the trade activities of the company includes tariff concessions, evaluation of tariff classification; chiefly for multinational business organizations and branded goods Customs valuation is very curtail to maintain the compliance with the government of Australia. A team should be appointed by the management of the company in order to monitor the changing policies of the government and legislative changes, there are several third party companies also available who can be appointed to do the analysis for the company (Elliott, 2016).

Customs Compliance Strategy 2016

The Australian Border Force (Customs) has recently launched Goods Compliance Update. It provides with four areas of focus. Pertaining to the particular interest of the importers in the country review of the correct use of Tariff Concession Orders (TCOs) and correctly revealing the customs value of imported goods have been stated clearly. For over 18 months, it has been the prime concern of the customs of Australia that TCOs offers a free rate of duty where no substitutable goods are produced in Australia and the subject of a number of Administrative Appeal Tribunal (AAT) cases (Grainger, Customs management in multinational companies, 2016). The usage of Tariff concession orders without continuous monitoring of the products or service as well as the applicable TCOs are not recommended, provided the change in Customs and the AATs views on TCO as eligible.

The procedure for the valuation of goods can be a complicated because a lot of prerequisites have to be kept in the mind. It is a mandate that a business organization should always analyze the amounts that are paid in addition to amounts that appear on the commercial statement. It also has to be reviewed that whether they are needed to be integrated in the customs value. Furthermore, the concept of free goods is a myth hence there will be rules regarding valuation and analysis to evaluate the amount of that product (Rothengatter, 2016).

Trusted Trader

The Australian Trusted Trader is a voluntary business improvement facility steps that are taken in collaboration in between the government and business organizations in order to seek trade benefits for the importers and exporters that have a history and record of customs compliance and have effective security practices to protect non-compliance. It encourages the trade practices of a secure supply chain and business organization that have a good record of compliance, rewarding such businesses with a variety of benefits to smoothen the business process (Widdowson, Blegen, Kashubsky, & Grainger, 2014). Some of the rewards or benefits that are enjoyed by the traders who are enlisted in this facility are: assigned account manager who will deal with and take care of the account management and keep in check whether the company is in compliance with the legal duties this person is also going to be the point of contact for the customs department. These companies are also eligible to get premium and priority based trade services form the government. Traders who are associated with the government have the liberty to use the Australian Trusted Trader logo, which is a sign of goodwill and prosperity for the company. It not only allows the company to grow in the eyes of the customers but also has a significant impact among the industry and market.

A mutual recognition arrangement (MRA) has been drawn up in between Australia and some other countries to facilitate trade, the companies that have been enlisted to the Trusted Traders will have access to trade facilitation benefits as well. The MRAs between the Australian Government and other trading partners are: New Zealand Customs Service, Republic of Korea Customs Service, Canada Border Services Agency, Hong Kong Customs and Excise Department. This arrangement will facilitate and benefit the traders in expansion and in import and export in between the above companies. The MRAs will offer Trusted Trader exporters with differentiated border services and treatment in signed countries, simultaneously on business arrival in Australia with the countries that have signed the MRA will also receive priority treatment (Mein, 2014).

Customs Valuations and Transfer Pricing

The transfer pricing modification to the price of imported goods is one of the prime ideas of focus for the Australian border force. These kinds of adjustments in the cost and pricing should be uncovered with Customs and accounted for in the records of the company. There are sometimes confusion and misunderstand regarding the interaction between customs valuation and transfer pricing in the importers this is a place where unknowingly companies may suffer from non-compliance (Missbach, 2015).


The government of Australia with the Customs valuation policies and decisions encourage the business and flow of business within the country to promote the economy of Australia. The customs are surely not being a gatekeeper as there is a lot of facilities and benefits are being awarded for the inflow and outflow of business form the country, if there was a strict gate keeping policy of the customers it would have restricted a lot of business opportunities within the country that would lead to a blockage of value in the economy, rather a risk based management approach by the customs administration of Australia analysis a problem or an issue of non-compliance within an organization and plans ahead of taking any steps or changes in the policies. This not only encourages new and young investors in the economy but also boosts and grants expansion and growth opportunities for the old traders in the industry.


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