Client Alert: July 17, 2026
DOJ and DHS Issue Joint “Resource Guide to Trade Fraud Enforcement”: What Companies Need to Know
EXECUTIVE SUMMARY
On July 6, 2026, the DOJ-DHS Trade Fraud Task Force released a joint Resource Guide to Trade Fraud Enforcement, consolidating the government’s civil, criminal, and administrative playbook for customs and trade violations.
The Guide follows Executive Order 14411, “Strengthening Customs Enforcement” (June 3, 2026), which directs CBP to maximize liquidated damages claims, restrict in-bond privileges, expand audits, and impose maximum broker penalties.
Importers of Record and Customs brokers face a non-delegable duty of “reasonable care” that cannot be contracted away to freight forwarders, suppliers, or brokers.
Enforcement spans the full spectrum: CBP administrative penalties (19 U.S.C. §§ 1592, 1595a(b)), the civil False Claims Act (treble damages, qui tam suits), Title 18 smuggling and false statement statutes (up to 20 years’ imprisonment), money laundering, RICO, and securities-law books-and-records exposure for issuers.
Forced-labor enforcement is a standalone priority, anchored by Section 307 Withhold Release Orders/Findings and the UFLPA rebuttable presumption for goods with any nexus to Xinjiang or 12 other high-priority sectors.
Recent resolutions illustrate the stakes: $549.5 million (AD/CVD evasion), $1.6 billion (emissions fraud), and $365 million (misclassification) settlements/resolutions in recent years.
Bottom line: DOJ and DHS expect companies to treat trade compliance as a board-level risk management priority — auditing supply chains, verifying counterparty representations, and avoiding willful blindness.
The Guide and Its Issuing Agencies
On July 6, 2026, the Trade Fraud Task Force — a joint initiative of the U.S. Department of Justice (“DOJ”) and the U.S. Department of Homeland Security (“DHS”) — published A Resource Guide to Trade Fraud Enforcement (the “Guide”). The Task Force includes DOJ’s National Fraud Enforcement Division, Criminal Division, Civil Division, and Environment and Natural Resources Division; the U.S. Attorney’s Office for the Northern District of Illinois; DHS’s Homeland Security Investigations (“HSI”), part of U.S. Immigration and Customs Enforcement; and U.S. Customs and Border Protection (“CBP”).
The Guide is not a regulation and creates no new private rights or defenses, but it is a candid statement of enforcement priorities and methods. For companies that import goods into the United States — or that sit downstream in a supply chain touching imported goods — the Guide is best read as a roadmap of where DOJ and DHS intend to look next.
Why It Matters Now
The Guide arrives amid a demonstrably more aggressive enforcement posture. On June 3, 2026, the President issued Executive Order 14411, “Strengthening Customs Enforcement,” directing CBP to make full use of its administrative toolkit against systemic compliance failures. Pursuant to the Order, CBP is now: enforcing liquidated damages claims against import bonds for noncompliance; restricting in-bond utilization; increasing compliance audits; and imposing maximum penalties on brokers who fail to conduct due diligence, repeatedly represent noncompliant clients, or fail to cooperate promptly with CBP information requests. We have seen a significant spike among our clients receiving CF28 Requestion for Information to verify country of origin.
The Guide is equally direct about corporate oversight expectations. DOJ states plainly that “the era when a company can claim ignorance of its upstream partners’ activities is over.” Every participant in the supply chain — importer, wholesaler, transporter — is expected to audit its supply chain, verify counterparty representations, and avoid willful blindness to red flags in pricing, sourcing, or documentation. In assessing corporate liability, DOJ says it will look closely at whether a compliance failure reflects negligence, reckless disregard, willful blindness, or intentional criminality — language that tracks the culpability spectrum DOJ applies in other regulatory-enforcement contexts (e.g., export controls and sanctions) and signals that boards and C-suites, not just compliance staff, are expected to own this risk.
The Customs Entry Process: IOR and Broker Obligations
The Guide devotes substantial attention to the mechanics of the entry process, underscoring that most trade fraud enforcement traces back to false or incomplete statements made at entry and the legal duty of care for importers under customs law – “reasonable care”.
The Guide also flags the growing significance of “external revenue authorities” layered on top of ordinary tariff schedules — Section 301, Section 232, Section 201 global safeguards, and antidumping/countervailing duty (“AD/CVD”) orders, which can exceed 100% — and in some cases 600% or more — of declared value. These elevated duty rates are precisely what create the financial incentive for the fraud typologies discussed below.
Civil and Criminal Enforcement Tools
The Guide catalogs an unusually broad range of enforcement mechanisms, reflecting DOJ and DHS’s view that trade fraud should be met with the full suite of available remedies rather than administrative penalties alone.
CBP Administrative Authority
Under 19 U.S.C. § 1592 (“Section 592”) and 19 U.S.C. § 1595a(b), CBP may impose civil administrative penalties for negligent, grossly negligent, or fraudulent entries, with penalty ceilings scaling with the level of culpability, and may seize merchandise entered contrary to law.
Civil False Claims Act
The civil False Claims Act, 31 U.S.C. §§ 3729–3733, is one of DOJ’s primary tools for customs duty evasion, most often through “reverse false claims” theories — i.e., knowingly avoiding an obligation to pay duties owed to the government. The FCA carries treble damages and per-claim penalties, and its qui tam provisions allow private whistleblowers (including competitors and former employees) to file suit on the government’s behalf and share in any recovery, which has made it a leading driver of large-dollar customs settlements.
Criminal Statutes
Title 18 contains a cluster of criminal provisions specifically addressed to “fraud upon the customhouse”: 18 U.S.C. §§ 541 (entry of goods falsely classified), 542 (entry of goods by means of false statements), 545 (smuggling, punishable by up to 20 years’ imprisonment), 548, 550, and 551. The Guide emphasizes that Section 545 and related provisions reach not only the importer but down-chain actors — anyone who knowingly receives, conceals, buys, sells, or facilitates the transport or sale of goods imported contrary to law — and that conspiracy and aiding-and-abetting liability under 18 U.S.C. §§ 2 and 371 extend exposure further still.
Money Laundering and RICO
Transactions over $10,000 involving the proceeds of trade fraud can trigger money laundering charges under 18 U.S.C. §§ 1956–1957. Where trade fraud is sufficiently organized and repeated, the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §§ 1961–1968) is also in play — a statute the Guide notes can reach corporate executives who did not personally commit the underlying fraud, and which carries up to 20 years’ imprisonment, forfeiture, and (for private plaintiffs) treble damages.
Health, Safety, and Securities Exposure
The Guide also cross-references the Federal Food, Drug, and Cosmetic Act, the Consumer Product Safety Act, and the Lacey Act’s criminal provisions for regulated or dangerous goods, and flags federal securities law exposure for public-company issuers — specifically the books-and-records and internal-controls provisions of Section 13(b)(2) of the Securities Exchange Act, 15 U.S.C. § 78m(b)(2), and related disclosure obligations where trade fraud liabilities are material.
Forced Labor Enforcement
The Guide devotes a full chapter to forced labor, which DOJ and DHS frame as both a humanitarian and a national security priority.
Section 307 (19 U.S.C. § 1307): prohibits entry of goods made with forced labor. CBP may issue a Withhold Release Order (“WRO”) on reasonable suspicion, or a Finding on probable cause, which can result in seizure and forfeiture.
Uyghur Forced Labor Prevention Act (Pub. L. 117-78): creates a rebuttable presumption that goods mined, produced, or manufactured wholly or in part in Xinjiang, or by an entity on the UFLPA Entity List, are made with forced labor and barred from entry. Importers must rebut this presumption with “clear and convincing” evidence — a demanding standard that requires granular, verifiable supply chain documentation.
Forced Labor Enforcement Task Force (FLETF) and the UFLPA Entity List: FLETF maintains and expands the Entity List, which importers should screen against on an ongoing basis, not merely at onboarding.
Twelve high-priority sectors: apparel, cotton, silica/polysilicon, tomatoes, aluminum, PVC, seafood, steel, copper, lithium, caustic soda, and jujubes — sectors that CBP and HSI are directing disproportionate enforcement attention toward.
Criminal exposure: Title 18, Chapter 77 (18 U.S.C. §§ 1589, 1592, 1593, 1593A, 1594) criminalizes forced labor and related trafficking offenses connected to imported goods, with mandatory restitution and forfeiture upon conviction.
Common Trade Fraud Typologies — and Recent Enforcement Examples
The Guide devotes its longest chapter to recurring fraud typologies. The typologies below are drawn directly from the Guide, illustrated with recent settlement and prosecution figures cited in the Guide and related DOJ/EPA press releases.
Valuation, Classification, and Origin Fraud
Manifest fraud — falsifying cargo manifests to misstate the nature, quantity, or origin of goods.
False country-of-origin declarations and markings — mislabeling goods to obscure their true origin, often to evade country-specific tariffs or AD/CVD orders.
False HTS classification — assigning an incorrect Harmonized Tariff Schedule code to secure a lower duty rate.
Undervaluation — understating the transaction value of imported goods to reduce ad valorem duties owed.
Antidumping/countervailing duty (AD/CVD) evasion — transshipment, mislabeling, or misclassification designed to avoid AD/CVD rates that can exceed 100%, and in some cases 600%, of declared value.
Structural and Programmatic Fraud
Shell company fraud — using shell entities to obscure the true importer, manufacturer, or beneficial owner and evade penalties or bond obligations.
Customs broker fraud — brokers who knowingly file false entries, fail to exercise due diligence, or facilitate a client’s scheme.
Drawback fraud (false export claims) — falsely claiming refunds of duties paid on imported goods that are supposedly re-exported.
Free Trade Agreement (FTA) fraud — falsely certifying that goods qualify for preferential duty treatment under an FTA when they do not meet rules-of-origin requirements.
Port shopping — routing entries through ports perceived as having weaker scrutiny or inspection capacity.
Health, Safety, and Environmental Fraud
Forged product safety or environmental certifications (e.g., CPSC/EPA fraud) — fabricating compliance certificates to secure entry of regulated goods.
Failure to report dangerous or defective products or adverse events — withholding required notifications to PGAs such as the Consumer Product Safety Commission.
False declaration of regulated commodities — including evasion of “prior notice” and import-alert requirements for regulated food products.
Illegal timber and wildlife laundering — disguising the species, origin, or legality of timber and wildlife products in violation of the Lacey Act, the Endangered Species Act, and related statutes.
Importing adulterated drugs and devices — introducing pharmaceuticals or medical devices that do not meet FDCA requirements.
Practical Corporate Compliance Takeaways
The Guide’s core message to industry is that trade compliance can no longer be treated as a back-office, logistics nerds’, check-the-box function. In light of EO 14411 and the enforcement examples above, we recommend that importers, brokers, and their counsel take the following steps:
Audit the supply chain, end to end. Conduct periodic, documented audits of suppliers, manufacturers, and intermediaries — including sub-tier suppliers — with particular attention to country of origin, valuation, and HTS classification support.
Independently verify counterparty representations. Do not rely solely on supplier certificates of origin, FTA qualification statements, or forced-labor attestations; corroborate with production records, site visits, or third-party audits where feasible.
Avoid willful blindness. Establish escalation protocols for red flags — pricing anomalies, inconsistent documentation, shell-entity indicators, or sourcing from high-priority forced-labor sectors — and document how red flags are investigated and resolved.
Remember the duty of reasonable care cannot be outsourced. IORs remain liable notwithstanding reliance on brokers or freight forwarders; broker relationships should be documented and monitored, not treated as a liability shield.
Screen against the UFLPA Entity List and high-priority sectors on a recurring basis, and build “clear and convincing” evidentiary files in advance for goods sourced from or near Xinjiang or the 12 high-priority sectors.
Reassess AD/CVD and FTA duty positions. Given duty exposure that can reach 100–600%+ of declared value, confirm classification and origin positions are supportable and consider a voluntary self-assessment or prior disclosure where issues are identified.
Treat trade compliance as enterprise risk management. Ensure C-suite and board-level visibility into trade compliance, given DOJ’s stated focus on whether failures reflect negligence, reckless disregard, willful blindness, or intent — and the securities-law books-and-records implications for public issuers.
Prepare for CBP’s expanded administrative posture. Anticipate more frequent audits, CF 28/29’s, liquidated damages claims, and in-bond restrictions under EO 14411, and ensure entry-level documentation can withstand heightened scrutiny.
Consider whistleblower exposure. Qui tam suits under the False Claims Act are a leading driver of large customs settlements; internal reporting channels and prompt investigation of complaints can mitigate this risk.
Conclusion
The recently published Resource Guide to Trade Fraud Enforcement confirms that DOJ and DHS view customs and trade fraud as a whole-of-government enforcement priority, backed by administrative, civil, and criminal tools that reach importers, brokers, corporate officers, and down-chain actors alike. Companies with import operations — or supply chains that touch high-priority sectors or heightened AD/CVD exposure — should treat the Guide’s publication as an occasion to reassess compliance programs now, before an audit, whistleblower complaint, or CBP audit/enforcement forces the issue.
