How CBP Defines a Bad Broker and Why Your Process Is the First Thing They Check

At the Trade and Cargo Security Summit (TCSS), which concluded this week, CBP explained what a bad customs broker is and what shippers should look out for to avoid getting caught up with one. But what many expected was not what they got. CBP was far better at identifying the behaviors and processes it considers typical of a bad broker than at clearly defining a good one.

This difference will change how customs brokers think about compliance readiness. CBP defines a bad customs broker by the behavior and processes behind its filings, not by the results of those filings. As outlined in CBP's TCSS enforcement posture, enforcement will now be stricter than what brokers have been accustomed to for years.

What CBP Looks for When It Audits a Customs Broker

Under 19 CFR 111.28, customs brokers are evaluated against guidelines that relate directly to their ability to exercise responsible supervision and control. The regulation outlines what you must do, including providing sufficient employee training and monitoring your rejection rate relative to overall volume. Brokers must also keep current editions of the HTS and all applicable CBP regulations readily accessible, among other requirements. In addition, a licensed broker should regularly visit office locations that don't have a qualified license holder on site.

The regulations reflect the minimum compliance requirements. CBP considers a bad broker to be a paper pusher: a brokerage that accepts the importer's information, enters it into the system, files it, and moves on to the next entry without checking product data consistency or country-of-origin statements. CBP also considers a broker who makes the same mistake more than once, or lets importer clients make it more than once, to be a bad broker.

CBP views brokerages that consistently demonstrate compliance as good brokers. These brokerages ask clients for more information about product composition and intended use, challenge ambiguous descriptions before filing an entry, and follow up on discrepancies found during purchase-order reviews. Increasingly, a good broker identifies errors, addresses their root causes, and puts processes in place to prevent them from recurring.

Why Customs Audit Outcomes Are a Lagging Indicator of Your Process

From CBP's perspective, inconsistent classifications across multiple entries, repeated classification mistakes on the same product, and filing decisions with no explanation of how they were reached are all evidence of a "bad" brokerage.

"If you have a great process, you will not have the bad results that CBP is looking for," said Hugo Pakula, CEO of Tru Identity. When CBP finds that your classifications for the same product differ across multiple entry summaries, it does not treat that as a one-off misclassification. It flags the absence of the standard operating procedures that should have prevented it.

Brokers often misunderstand this part of the process. Correcting a specific classification error is not enough, because CBP expects to see the processes that prevent future errors, not just the correction of the last one.

How Customs Broker Enforcement Escalates From CF-28 to Penalties

At TCSS, CBP explained how it escalates enforcement against customs brokers. A CF-28 asks the broker for additional information and serves as a warning. If CBP is not satisfied, it escalates to a CF-29 (Notice of Action). After that, enforcement gets real: CBP can impose financial penalties on the brokerage, conduct extensive audits, or suspend the brokerage's license to operate.

CBP is going after repeat offenders regardless of filing volume. Whatever your volume, CBP wants to know whether the brokerage corrected its actions after receiving a warning, because that is what triggers escalation and enforcement.

This is not new. It has been part of CBP's broader enforcement language, but what changed with the announcement at TCSS is the specificity. CBP is telling brokerages that they are the regulated party, the licensed party that can be suspended, and the party CBP can actually hold accountable.

Being Compliant and Proving It Are Two Separate Obligations

In an enforcement environment like this, customs brokers need two audits. The first is a compliance audit: is the broker getting the classification, value, and entry right? The second is making sure there is documentation CBP can review that shows the firm's compliance from the outside.

Pakula broke this down during the TCSS discussion: "There's actually being compliant, which is one discipline. And the second thing you have the obligation to do is to show your compliance, to demonstrate outwardly every way you possibly can." That second obligation is where most brokerages fall short. It means maintaining audit trails, documenting how classification decisions were made, and showing CBP evidence of improvement over time.

That proof includes recording how classification decisions were made, tracking reject-rate trends, keeping records of quarter-to-quarter changes in internal controls, and making sure every record can be produced if CBP requests it. Very little technology helps brokerages meet the obligation to prove compliance, which is why the gap between being compliant and being able to prove it remains so large.

How Tru Identity Helps Customs Brokerages Demonstrate Compliance to CBP

Tru Identity is the first technology that CBP has allowed to be used both internally and made available to the importing community. When Tru generates an entry for you, it aligns the entry with the way CBP reviews it, helping brokerages ensure compliance and reduce audit risk. You're singing from the same songbook.

Brokerages using Tru are building the documented evidence of compliance that CBP looks for during audits and focused assessments. Each classification decision carries a timestamped record of the rule version in effect at the time of filing, and that audit trail covers both obligations. Learn more about Tru's selection by CBP, or speak with a representative from Tru about your 19 CFR compliance.

Frequently Asked Questions

Q1. How often does CBP audit customs brokers?

CBP conducts audits on both scheduled and event-driven timelines. Focused assessments can be triggered by a pattern of errors, a CF-28 or CF-29 history, or random selection. There is no fixed annual schedule. CBP uses a risk-based approach, so brokerages with higher error rates or compliance concerns are more likely to face review.

Q2. What is a focused assessment in customs compliance?

A focused assessment is a structured CBP audit that evaluates an importer's or broker's compliance risk in a specific area, such as classification, valuation, or country of origin. It goes deeper than a quick response audit and typically involves a review of internal controls, entry documentation, and financial records.

Q3. What records should customs brokers maintain for a CBP audit?

Customs brokers must maintain records for five years. This includes entry documentation, classification rationale, country-of-origin verification, valuation records, powers of attorney, correspondence with importers, and any supporting documents used to make filing decisions. Poor recordkeeping is one of the most common compliance red flags CBP identifies during audits.

Q4. What is responsible supervision and control under 19 CFR 111?

Responsible supervision and control under 19 CFR 111.28 requires a licensed customs broker to actively oversee all customs business conducted under their license. This includes training employees, reviewing entries, monitoring reject rates, and maintaining documented processes. Since the 2022 modernization regulations, this obligation follows the national permit across the entire customs territory.