The federal government is sharpening its focus on customs violations that it views as systemic threats to U.S. economic and national security. Two August 13 announcements place transshipment, country-of-origin fraud, undervaluation, sanctions evasion, and forced-labor supply chains near the center of the government’s enforcement agenda.
The Justice Department’s National Fraud Enforcement Division identified global trade and commerce as a formal enforcement priority. On the same day, the White House released a report estimating that illegal transshipment may account for tens of billions of dollars in annual trade and tariff exposure.
DOJ Identifies Global Trade and Commerce as a Priority
The DOJ memorandum directs the National Fraud Enforcement Division to lead a coordinated criminal enforcement strategy targeting trade and customs violations. Through the Trade Fraud Task Force, prosecutors will prioritize systemic, high-impact noncompliance involving:
- Illicit transshipment schemes
- False or misleading country-of-origin claims
- Undervaluation designed to evade duties
- Sanctions evasion
- Foreign forced-labor schemes
This builds on DOJ and DHS actions announced in July, including the creation of the Global Trade and Commerce Enforcement Section and the government’s reported $1 billion milestone in trade-fraud recoveries, penalties, forfeitures, and charged losses.
White House Report Highlights Third-Country Routing
The White House report, titled “The Great Transshipment Scam,” examines how goods may be routed through third countries to disguise origin, avoid tariffs, or gain preferential treatment. It uses a central estimate of approximately $75 billion in annual illegal transshipment and estimates associated federal revenue losses of $19 billion to $26 billion.
Those figures are model-based estimates rather than observed violations. Even so, the report provides a clear policy signal. The government plans to use more sophisticated shipment analysis and AI-supported tools to identify unusual trade flows, origin discrepancies, and routing patterns.
Compliance Exposure Extends Across the Supply Chain
Enforcement does not necessarily stop with the importer of record. Customs brokers, distributors, suppliers, purchasing teams, and downstream companies may face questions when they knowingly participate in or benefit from improperly entered merchandise.
Importers sourcing through Southeast Asia, Mexico, and other manufacturing hubs should verify that claimed origin is supported by actual production. Moving, repacking, relabeling, or completing minor processing in a third country generally does not create a new country of origin. A substantial-transformation analysis must be supported by facts, production records, and applicable legal standards.
Practical Steps for Importers
- Review supplier affidavits and bills of materials for high-duty and high-risk products.
- Document where meaningful manufacturing occurs and how the product changes at each stage.
- Compare declared values against purchase orders, assists, commissions, royalties, and related-party pricing.
- Investigate unusual routing, rapid shifts in origin, or suppliers that cannot explain their production capacity.
- Create an escalation process for inconsistencies before entries are filed.
ASK Alba™
Contact Alba’s trade experts to evaluate country-of-origin support, valuation practices, supplier documentation, and potential exposure before an issue becomes an enforcement matter.
Source: DOJ memorandum on National Fraud Enforcement Division priorities
