Regional Commander Victoria, James Watson said this result sends a strong message to companies who do not comply with their licensing conditions.
"These depots are trusted to store and handle potentially dangerous goods and we won't tolerate any breach of that trust," Commander Watson said.
"We will always put the safety of the public first and if any depots are found to be in breach of their licence conditions by mishandling the goods in their care, we won't hesitate to issue infringements and ultimately cancel those licences if necessary."
Farm Fresh Logistics was licenced under Section 77G of the Customs Act 1901 to hold goods prior to being customs cleared from its site in Tottenham, Victoria.
The Australian Border Force (ABF) stated their licence cancellation was the result of multiple breaches including:
unpacking, moving and storing goods outside of the licenced area;
failing to keep goods in a separate and distinct area from goods not subject to customs control;
failing to provide commercial records relating to goods received into the depot;
failing to maintain a depot log book providing details of people entering the licensed area;
failing to maintain adequate fencing and gates; and
failing to implement and maintain an effective accounting system.
ABF officers served the company with a Notice of Intended Cancellation and Suspension of the Customs Depot Licence pursuant to s77V of the Customs Act 1901. This meant the depot licence was immediately suspended with full cancellation taking effect on Tuesday, 11 April 2017.
This follows the 2014 depot licence cancellation of the Sydney depot, Ausfreight.
In my 33 years of experience in Customs' activities, I do not previously recall a depot licence being cancelled. This is understandable as this action is commercially devastating for a business entity and is one that the regulator cannot complete without due diligence.
At the same time, in the current environment, the ABF is making no apologies for their tough stance.
This position from ABF is totally appropriate. Licenced depots and warehouses are trusted entities and are regulated to safely keep and deal with goods under Customs' control.
Contemporary compliance environment
Our borders have been undermined by internal conspiracies linked with organised crime which has infiltrated the ranks of both government and industry.
Two reports have also highlighted organised crime threats and vulnerabilities across our industry, these being the Parliamentary Joint Committee on Law Enforcement (PJCLE) 2011 and a 2012 report prepared by Joint Task Force Polaris which examined criminality in the Sydney maritime environment.
These reports highlighted that:
individuals with access to restricted zones at airports and seaports have been identified on law enforcement high-threat, priority target lists;
individuals have accessed cargo movement information to track illicit goods and have provided that information to criminal groups; and
individuals have accessed containers in terminals to collect illicit goods for criminal groups.
In response, we have seen the introduction of the AusCheck Legislation Amendment (Organised Crime and Other Measures) Bill 2013 to amend the Customs Act 1901 and the AusCheck Act 2007 to mitigate vulnerabilities at Australia's borders and focussing on stevedores, air cargo terminal operators, licenced customs brokers, depot and warehouse operators.
It is a timely reminder to look at the obligations emerging from this legislation, including mandatory reporting of unlawful activity, ensuring the physical security of relevant premises and cargo, and fit-and-proper-person checks on management at Custom's request. Non-compliance will attract criminal or administrative sanctions.
Offence for using information held by Customs
All users of the Integrated Cargo System (ICS) also need to beware of penalties for sharing "cargo status" and other restricted information to aid a criminal organisation.
Penalties include imprisonment for two years or 120 penalty units (a penalty unit being $180) … or both.
Fit-and-proper person
As part of the existing depot licensing regime, the Customs chief executive officer (CEO) or his delegate must be satisfied that the applicant or persons who would participate in the management or control of a depot is a "fit-and-proper" person.
Where a company or partnership applies for a licence, this means any director, officer or shareholder of the company who would participate in the management and control of the place, to be covered by the licence or any partner of the partnership.
In addition to the existing matters in determining whether a person is fit and proper, the changes require the CEO to consider whether the person has been refused an aviation or maritime security identification card (ASIC or MSIC) or had an ASIC or MSIC suspended or cancelled in the previous ten years.
Change to depot licence holder's notification requirements
All depot licence holders are required to notify the CEO in writing, within 30 days, where certain events occur. This includes a requirement to notify the CEO when persons are convicted of certain offences or become bankrupt.
The changes to the Customs Act introduce an additional condition on the holder of a depot licence to notify the CEO in writing, within 30 days, where the licence holder, or certain persons where the licence holder is a company or partnership, have been refused an ASIC or MSIC or had an ASIC or MSIC suspended or cancelled.
Record keeping
Amendments made to the Customs Act have increased the time period for which a person must keep a record that verifies the contents of a communication made to Customs, from one to five years. This ensures consistency with other Customs Act record-keeping obligations.
Infringement Notice Scheme
The Infringement Notice Scheme (INS) is an alternative to prosecutions allowing for "on the spot fines" across Customs' activities in passenger processing and cargo management. Changes to the scheme have been implemented following recommendations from the Australian National Audit Office (ANAO) review.
Regulations now prescribe the maximum penalty at 25% of a court penalty (cap of 15 units for an individual and 75 units for a company).
As reported in the latest "Goods Compliance Update" issued in December 2016, concerning data was produced for the 1 July to 30 October 2016 period outlining a range of offences for breaches of depot licence, failure to meet outturn requirements and failure to account for goods. Forty-two (42) Infringement Notices issued were issued for breaches of Section 33 (6) of the Customs Act "Moving, altering or interfering with goods subject to customs control without authority" with total fines being $318,600.
Review
The ABF and Department of Immigration and Border Protection have recently completed an 18 month review of licensing and have released preliminary detail of the 15 recommendations submitted to the Comptroller-General of Customs. While procedural elements of licensing will be streamlined the powers and controls of the ABF if anything are likely to be strengthened.
Understanding Obligations
Section 77G Deport licence holders must provide adequate training to make staff aware of their obligations in dealing with goods subject to the control of Customs - please refer to Australian Customs and Border Protection Notice 2013/56 (condition 28).
Has your business met this requirement?
Has your staff received formal training and how well do they really know their obligations?
Do you have a training process in place as a part of induction training ?
Freight & Trade Alliance (FTA) has developed a training package titled "SEC 77G DEPOTS - Obligations in dealing with goods subject to ABF control".
This e-Learning course takes approximately 1 to 1.5 hours to complete - upon passing the online assessment a certificate with two years validity will be automatically generated.
Importantly, the course provides operational staff with learning outcomes to be able to complete day to day activities with confidence that they are compliant with legal requirements.
Paul Zalai – FTA / APSA