‘A mistake is easily made’: AEO and customs criminal law

1. Introduction

The prosecution of these offenses may have consequences when you apply for an AEO (Authorized Economic Operator) permit, as well as for your AEO status if you already have one. Indirectly, criminal penalties can also affect your customs permits that are closely linked to “AEO status”.

This article sets out the legal framework of the relevant provisions in the field of customs criminal law and AEO.

First of all, it is important to know that a single detected and punished irregularity does not have a direct consequence for an AEO application or existing AEO status. Most irregularities are dismissed as “mendum facile” in the criminal sphere, but these “mistakes” are not placed in a broader context where the (to be applied for) AEO status is influenced.

2. Legal Provisions

Article 39(a) of the UCC (Union Customs Code) states that one of the criteria for granting the status of “Authorised Economic Operator” or “authorised trader” is: “no serious or repeated offences against customs legislation and tax regulations and no criminal record of serious crimes related to the applicant’s economic activity.”

This is further elaborated in Article 24 of the UCC Implementing Regulation. Assuming that the applicant for AEO status is not a natural person, this article stipulates that the UCC criterion is met if (in short) the applicant, the director, or the person responsible for customs matters has not “committed any serious or repeated offences against customs legislation and tax regulations or had a criminal record of serious offenses related to the economic activity in the past three years.”

Several terms stand out: offenses, crimes and serious or repeated offence. What exactly is meant by these terms?

3. Distinction between offences and crimes

The terms used in the Community legislation, such as serious offence, criminal record, and serious crimes, are not further defined in Community law (UCC). This is logical since criminal law is a domain that belongs to the sovereignty of the member states. In other words, one must refer to national legislation for definitions.

The distinction between offences and crimes in customs matters is determined by whether the law provides for imprisonment for the offense. If imprisonment is possible, it is considered an crime. If imprisonment is not possible, it is considered an offence (Article 10:13 General Customs Act, Article 72 General Tax Act).

Since the Community legislation refers to “serious crimes,” it is not only the distinction between offences and crimes that matters but also whether there are serious offenses. Although we commonly refer to serious crimes or serious offenses, this is not a legal term in itself.

In common criminal law, the distinction between minor and serious crimes is derived from the regulations concerning the recording and retention in judicial documentation, the “criminal record.” Crimes automatically result in a notation on this record. Offenses can also be noted if, for example, a judge issues a conviction for the offenses (such as after filing an objection to a tax penalty order). Therefore, offenses generally do not result in a notation in the judicial documentation.

Minor crimes are those for which the law provides for a prison sentence of less than 6 years. Serious crimes are those for which the law provides for a prison sentence of at least 6 years. For minor crimes, the notation in the judicial documentation is typically removed 20 years after the final judgment or after full compliance with the penalty order. For serious crimes, this removal occurs 30 years after the final judgment or after full compliance with the penalty order.

Judicial records of offenses are generally removed 5 years after the final judgment or after full payment of a penalty order.

4. The concept of ‘repeated offenses

There is also no clear definition of the term “repeated offenses.” It is likely that Customs assesses the frequency in relation to the total activity volume of the entity involved.

For example, two incorrect declarations out of ten per year is relatively much more than 100 incorrect declarations out of 10,000 per year. However, where the exact boundary lies is neither defined nor known.

Currently, there are no concrete examples of not obtaining, not renewing, or revoking AEO status due to (repeated) offenses. Therefore, it cannot be determined from practice where the boundary lies. It thus seems to be largely an ‘arbitrary matter.’ The decision rests with the handling officer.

5. What if offenses have consequences?

Customs may decide to refuse an application for an AEO permit, not renew an AEO permit, or suspend or revoke an AEO permit. Such a decision must be preceded by a notice of intent. You can respond to this notice. Any decision by Customs to proceed with one of the aforementioned actions is always an ‘appealable decision.’ Therefore, you can file an objection against it or, if necessary, present the case to the administrative court in an appeal procedure. Customs must demonstrate and prove that the offenses are of such nature and extent that they justify their action (rejection, non-renewal, suspension, or revocation).

6. Conclusion

Offenses in the customs area can affect your AEO application, your AEO status, and consequently your permits. However, it is difficult to determine when Customs will take such actions since the relevant terminology is not defined and there are no concrete examples indicating how Customs handles specific cases.

It is clear that this assessment is highly case-specific and arbitrary. Any legal consequence, such as rejection, non-renewal, suspension, or revocation, will be communicated by Customs in an appealable decision. It is up to Customs to both assert and prove that the criteria of Article 39(a) of the UCC are not (or no longer) met. You can challenge this by filing an objection and, if necessary, an appeal with the administrative court.

More information

For more information, please visit the website www.customsknowledge.nlor contact Lidwina Hoekstra or SamanthaZwart-Speelman.

While every care has been taken in the preparation of this publication, Customs Knowledge accepts no liability for any errors or omissions, nor for their consequences. This article is not intended as specific advice. Please also refer to the General Terms and Conditions of Customs Knowledge BV.