U.S. Customs and Border Protection (CBP) clarified how existing Customs broker regulations apply to digital service platforms in Ruling HQ H350722. The decision evaluates whether an unlicensed foreign company offering importer support services through an online platform is conducting Customs business without a license. While certain platform functions were found permissible, CBP determined that several activities fall within the definition of Customs business and require a licensed broker.
WHAT SERVICES DID CBP EVALUATE IN HQ H350722?
CBP reviewed four functions offered through the platform: connecting importers with brokers, extracting entry data using an OCR tool, generating HTSUS classification suggestions through an AI tool, and submitting CBP Form 5106 on behalf of importers. Connecting importers with brokers may be permissible when limited to facilitating communication. However, extracting entry data through OCR and submitting CBP Form 5106 on behalf of importers is considered Customs business and requires a license. The treatment of AI-driven classification depends on how the tool is used, with classification tied to entry requirements potentially requiring a licensed broker.
WHEN DOES A DIGITAL PLATFORM CONSTITUTE CUSTOMS BUSINESS?
A platform may connect importers and brokers without engaging in Customs business if it is limited to transmitting information and does not influence what is submitted. In this case, facilitating document sharing and communication did not rise to Customs business.
However, compliance considerations related to power of attorney execution and broker confidentiality are concerns when these activities occur through a third-party platform. A broker must obtain a power of attorney directly from the importer, and the use of an intermediary platform in that process may not satisfy this requirement. In addition, broker-held client information is subject to strict confidentiality rules, and sharing that information through a third-party system may create compliance risk if proper authorization is in place.
DOES OCR DATA EXTRACTION REQUIRE A BROKER LICENSE?
Extracting entry data from shipping documents using OCR constitutes Customs business when the tool identifies and structures information that will appear on an entry. Even if a broker files the entry, selecting relevant data elements is considered part of entry preparation and requires a license.
HOW DOES CBP VIEW AI-DRIVEN CLASSIFICATION TOOLS?
CBP’s determination depends on how the tool is used. Classification limited to the six-digit level for general reference may be permissible. However, providing classification to the ten-digit level for goods that are imported or intended to be imported constitutes Customs business when that information may be used for entry. Disclaimers do not change this outcome. The distinction centers on whether the tool provides general guidance or directs how merchandise is classified for entry.
Kate Rayer, Vice President, Regulatory Services, LCHB, CCS at Green Worldwide Shipping notes that “AI is powerful, and right now, it’s the shiny, exciting thing everyone wants to lean into.” She emphasizes that in global trade, “it must be used judiciously, applied strategically, and thoroughly vetted.” Technology, she states, should “enhance compliance, not shortcut it,” and every tool must be evaluated “not just for what it can do, but for when it crosses into regulated Customs business.” This reinforces the need to validate how these tools are used when supporting Customs entry.
WHY IS CBP FORM 5106 NOW TREATED AS CUSTOMS BUSINESS?
Completing and submitting CBP Form 5106 on behalf of an importer constitutes Customs business because the form is required to establish importer identity prior to entry. As a result, only a licensed Customs broker may perform this function on behalf of another party.
HOW DOES THIS RULING DEFINE THE ROLE OF DIGITAL TRADE TOOLS?
HQ H350722 reinforces that technology does not change the regulatory framework governing Customs business. Activities that shape entry data, classification, or required documentation remain within the scope of licensed broker responsibilities.
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