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(f) "Freight forwarder" means any person engaged in the business of dispatching shipments on behalf of other persons for a consideration, in foreign commerce between the United States, its territories or possessions, and foreign countries, and of handling the formalities incident to such shipments. § 31.4 Application for license; investi

gation and examination. (a) Application to Commissioner. A person desiring to engage in the business of a customhouse broker shall submit to the collector of customs of the district in which the applicant intends to operate an application in duplicate, addressed to the Commissioner, stating his qualifications for a license. The application shall be under oath and executed on customs Form 3123 (individual), customs Form 3125 (partnership), customs Form 3127 (corporation), or customs Form 3129 (association), whichever is appropriate, and shall be accompanied by the fee of $150 prescribed by $ 24.12 of this chapter. If an applicant fails to pass the examination required by paragraph (c), he shall receive a refund of $75. If the applicant is an individual who proposes to operate under a trade or fictitious name, evidence of the applicant's authority so to conduct business must accompany his application.

(b) Posting application. As soon as possible after an application has been filed, the collector of customs shall cause to be posted conspicuously in the customhouse at the headquarters port for the district and at the port where the applicant proposes to maintain his principal office the name and address of the applicant and, if the applicant is a corporation, an association, or a partnership, the names of the licensed officers or members thereof.

(c) Examination of applicant. The collector of customs shall notify the applicant, if an individual, to appear before a committee of examiners at a specified time and place in the customs district in which the applicant proposes to do business. The committee of examiners shall consist of not less than three nor more than five members designated as such by the Commissioner.

(d) Purpose of examination. The examination shall have for its purpose a determination of the applicant's knowledge of customs and related law and procedure and his fitness to render valuable service to importers and exporters.

The Commissioner may from time o time furnish lists of suggestions for the guidance of committees of examiners conducting such examinations. The examination may, at the option of the conmittee, be oral or written, but if ora: shall be stenographically reported an. transcribed, and in either case shall be transmitted forthwith to the collector d customs, with the report and recommen. dation of the committee of examiners.

(e) Investigation of applicant-il Individual. Upon the applicant's oon taining a satisfactory grade on the eas amination, his application shall be res ferred by the collector of customs to the customs agent in charge of the area for investigation, report, and recommendation.

(2) Corporation, association, or parte nership. Each application shall be res ferred by the collector of customs to the customs agent in charge of the area for investigation, report and recommendation.

(3) Information desired. The investigation shall seek information relevant to the question whether the application should be granted and shall cover, but need not be limited to, (i) the correctness of the statements made in the application, (ii) the business integrity of the applicant, and (iii) when the applicant is an individual (including an officer of a corporation or association or a member of a partnership), the character and reputation of the applicant.

(4) Return of application to collector of customs. The investigating agent shall return the application with his report and recommendation to the collector of customs who requested it. The collector shall forward them to the Commissioner, accompanied by the report and recommendation of the committee of ex-1 aminers, if any. If he so desires, the collector may also submit his independent recommendation,

(f) Additional investigation of eI amination. The Commissioner shall endeavor to ascertain, without undue expense or inconvenience to the applicant, all facts deemed necessary to pass upon the application, and may require « additional investigation to be conducted In the event, however, that the Commissioner is not satisfied by the information received, he may require the applicant (or, in the case of a corporation, association, or partnership, one or more of its officers or members) to appear in per son before the Commissioner or before

de or more representatives of the Comuissioner, for the purpose of undergoing dditional written or oral examination ito the applicant's qualifications for a sense. ec. 641, 46 Stat. 759, as amended; 19 U.S.C. 41) 128 F.R. 14829, Dec. 31, 1963, as nended by T.D. 56107, 29 F.R. 2336, Feb. 11, 64; T.D. 56288, 29 F.R. 14493, Oct. 22, 1964) 31.5 Issuance or denial of license. (a) Issuance if applicant qualified. If : finds that the applicant is qualified, e Commissioner will issue a license in ch standard form as he shall have preribed. The license shall be forwarded

the appropriate collector, who shall liver it to the licensee after making record thereof in a roster of licensed okers which shall be maintained in the istomhouse in such manner that it will : readily accessible to the proper cusms omcers and employees. The license r an individual who is an officer of a orporation or association or a member

a partnership will be issued in the ame of the individual licensee, and not 1 his capacity as officer or member of de organization with which he is conected.

(b) Denial of license. (1) If the pplicant fails to obtain a satisfactory 'ade on the examination, notice of enial shall be given by the collector to le applicant.

(2) At the request of the applicant, le Commissioner may allow a further pportunity to the applicant to present iformation or arguments in support of is application either by personal ap'arance or in writing, or both, in the scretion of the Commissioner. (3) If the Commissioner determines lat the application for license should be anied for any reason, notice of denial all be given by the Commissioner to le applicant and to the collector of the istrict in which the applicant proposed do business.

(c) Grounds for denial of license. The suses sufficient to justify denial of an pplication for a license shall include, ut shall not be limited to, (1) any cause hich would justify suspension or revoation of the license of a licensed cusmhouse broker under the provisions of 31.11; (2) a failure to establish the usiness integrity and character of the pplicant; (3) any gross misstatement of ertinent facts in the application; (4) ny conduct which would be deemed rossly unfair in commercial transactions

by accepted standards; (5) a bad reputation imputing to an applicant conduct of any of the foregoing types or of a criminal, dishonest, or unethical kind; (6) the minority of the applicant; or (7) a failure to establish suficient knowledge by the applicant of customs and related law and procedures and fitness to render valuable service to importers and exporters. In the case of a corporation, association, or partnership, the application will be denied by the Commissioner unless it appears that the officers or members who are licensed customhouse brokers are to exercise responsible supervision and control of the transaction of the customs business of such corporation, association, or partnership. An individual who is unable for any reason to take the oath of allegiance and to support the Constitution of the United States shall not be licensed. An alien undergoing naturalization is ineligible to receive a license until he has received his final naturalization certificate. An officer or employee of the United States is ineligible to receive a license.

(d) Review. A decision of the Commissioner denying a license, upon the written request of the applicant, will be submitted to the Secretary of the Treasury for such review as the Secretary shall deem appropriate. § 31.6 Other representation by custom

house brokers. A customhouse broker requires no further license or enrollment for the representation, within the customs districts in which he is licensed, at the office of the Regional Commissioner of Internal Revenue, or at the seat of the Government, of any person for whom he has acted as customhouse broker in respect of any matters relating specifically to the importation or exportation of merchandise under customs or internal-revenue laws. $ 31.7 Licenses for more than one cus

toms district. Separate licenses shall be required if the licensee desires to transact customs business in more than one customs district. However, a licensee having a license in force in one district may on application to the Commissioner be granted a license to transact business in another district without further examination, provided it appears on investigation that the licensee is prepared and qualified to render efficient service in such other district. Licenses may be

granted to partnerships with two 11- ized manner, and keep current, record censed members, and to corporations of account reflecting all his financial and associations with two licensed offi- transactions as a customhouse broke cers, whether or not such members or He shall keep and maintain on file a copi officers are licensed in the district for of each entry made by him, and copies d which the partnership, corporation, or all his correspondence and other papers association license is granted.

relating to his customs business. 8 31.8 License, when not required.

(b) Except as provided for in pars.

graph (c) of this section, each custom (a) Dealing for one's own account. house broker shall keep on customs An importer or exporter transacting cus- Form 3079 (Record of Transactions of toms business solely on his own account Licensed Customhouse Broker), in 80 and in no sense on behalf of another is

cordance with the instructions printed not required to be licensed, nor are his

thereon, records of all customs business authorized regular employees or oficers transacted by him in behalf of his clients who act only for him in the transaction

If a transaction has been handled only of such business.

in part by the broker, he need all in only (b) Transportation in bond by com

the appropriate part of his customs Form mon carrier. A common carrier trans

3079. Records on customs Form 3078 porting merchandise for another may shall be in addition to, and not in lieu of, make entry for such merchandise for the regular records of account required transportation in bond without being

by paragraph (a) of this section to be licensed as a customhouse broker.

kept and maintained. (c) Marine transactions. A person (C) If the data prescribed to be the transacting business in connection with corded on customs Form 3079 are disentry, clearance, or documentation of closed in other records regularly kers vessels or other regulation of vessels and maintained by & customhouse under the navigation laws is not required broker in a systematic, convenient, and to be licensed as a customhouse broker. readily available form which will per. (d) Employees of licensed brokers.

mit an effective inspection thereof by An employee of a customhouse broker is

customs field auditors, such broker may not required to be licensed in order to act by notice in writing from the collector for solely for his employer, but in order that the district, be exempted from the resuch employee may sign customs docu

quirements of paragraph (b) of this secments on behalf of his employer the tion. Such notice of exemption shall be broker must file with the collector a

issued only if (1) a broker makes written power of attorney for that purpose.

application therefor to the collector, setEach broker shall file with the collector

ting forth the facts as to the records he at each port where the business is to be

keeps and agreeing that if the exemption transacted an authorization specifically is granted he will not change his system naming each employee who may prop- of records or his manner of keeping and erly act for him. A broker must promptly maintaining them without notification to give notice of any change in the author- and prior approval by the said collectar ity of any such employee and must ex- and (2) the collector and the comptroller ercise such supervision of his employees of customs for the district are satisfied as will insure proper conduct on the part that the records are and will be kept and of the employees in the transaction of maintained by the broker in conformity customs business. Each broker will be with the conditions above stated. held strictly responsible for the acts or (d) Whenever it shall appear to the omissions of his employees within the

satisfaction of the collector, upon an scope of their employment, and for acts or omissions of such employees which,

audit by a customs field auditor that in the exercise of reasonable care and dil

broker to whom an exemption has been igence, the broker should have foreseen.

granted as provided for in paragraph (c Every attorney in fact acting for a cus

of this section is not keeping and maintomhouse broker must be a resident of taining records in conformity with the the United States.

requirements of the said paragraph (e). § 31.9 Books and papers.”

the exemption of such broker shall be re

voked by notice in writing from the cor(a) Each customhouse broker shall maintain correctly and in orderly item

lector, and such broker shall thereafter,

keep and maintain records on customs * See section 641 (d) in footnote 1 to $ 81.2. Form 3079 as above stated.

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(e) All the books and papers required by the foregoing provisions of this section shall be kept on file for at least 5 years and maintained in such manner that they may readily be examined. Any or all such books and papers shall be made available to customs field auditors or customs agents on demand therefor within 5 years after their preparation or receipt by the broker, or within any longer period of time during which hey remain in the possession of the broker. Each customhouse broker shall udvise the Commissioner and the colector at the headquarters port in each district in which his license is held of ach change of his business address. The broker shall also furnish such addiional information regarding his activties as a customhouse broker as such sustoms field auditors or customs agents nay require.

(f) The comptroller of customs or a customs field auditor designated by him shall make such inspection of the books and papers required by this part to be kept and maintained by a customhouse broker as may be necessary to enable the comptroller of customs, the collector of customs, and other proper officials of the Treasury Department to determine whether or not the broker is complying with the requirements of this section. Furthermore, the comptroller of customs or any customs field auditor designated by him, or the customs agent in charge, may at any time, for the purpose of protecting importers or the revenue of the United States, inspect such books ind papers to obtain information regardng specific customs transactions.

(g) The comptroller of customs, cusoms field auditor, or customs agent naking any inspection contemplated by paragraph (f) of this section shall resort his findings to the Commissioner ind the collector.

(h) The books and papers referred to o this section and pertaining to the busiless of the clients serviced by the broker hall be considered confidential and the jroker shall not disclose their contents or any information connected therewith o any persons other than such clients ind the comptroller of customs, the cusoms agent in charge, or their representitives except on subpoena by a court of ompetent jurisdiction. 28 F.R. 14829, Dec. 31, 1963, as amended by CD. 56201, 29 F.R. 8400, July 3, 1964)

§ 31.10 Other duties and obligations of

customhouse brokers. (a) No customhouse broker shall permit his license or his name to be used by or for any unlicensed person, or by or for any broker whose license is under suspension, in the solicitation, promotion, or performance of any customs business or transaction.

(b) (1) No customhouse broker shall accept or retain employment from or with an unlicensed employer to transact customs business for others than the employer in such manner that the fees or other benefits resulting from the services rendered by the broker for others inure to the benefit of the unlicensed employer, except that a customhouse broker may compensate a freight forwarder for services rendered in obtaining brokerage business, provided that

(1) The importer shall be notified in advance by the forwarder or broker of the name of the customhouse broker selected by the forwarder for the handling of his customs transactions;

(is) If the fees and charges for such brokerage services are to be collected by or through the forwarder, the customhouse broker shall transmit directly to the importer a true copy of his bill of charges as rendered to the forwarder. If, on the other hand, such fees and charges are to be collected by or through the customhouse broker, he shall transmit directly to the importer a statement of his bill of charges and an itemized list of any charges to be collected for the account of the freight forwarder.

(iii) No part of the agreement of compensation between the customhouse broker and the forwarder, nor any action taken pursuant thereto, shall forbid or prevent direct communication between the importer and the customhouse broker; and

(iv) In making such agreement and in all actions taken pursuant thereto, the customhouse broker shall be subject to all other provisions of these regulations and any amendments thereto.

(2) Where a customhouse broker is employed for the transaction of customs business by an unlicensed employer who is not the actual importer, a copy of the statement of charges made by the customhouse broker must be transmitted to the actual importer by the customhouse broker, except where the merchandise was purchased for delivery on an all free basis.

(C) No customhouse broker shall specifically or generally authorized to d knowingly and directly or indirectly (1) so by such person. accept employment to effect a customs (e) No customhouse broker shal transaction as associate, correspondent, knowingly use false or misleading reprs officer, employee, agent, or subagent from sentations to procure employment in any any person whose license as a custom- customs matter, nor shall he represent house broker shall have been revoked for to a client or prospective client that he any cause, or whose license is under can obtain extraordinary favors from the suspension, or who has surrendered his Treasury Department or any representat license “with prejudice," or who is noto- tive thereof. riously disreputable, or (2) assist the (f) No customhouse broker shall rep furtherance of any customs business or resent a client before the Treasury Detransactions of such person, or (3) em- partment or any representative thereof ploy, or accept such assistance from, in any matter to which the broker, as any such person, or (4) share fees with officer or employee, gave personal conany such person, or (5) permit any such sideration, or as to the facts of which he person directly or indirectly to partic- gained knowledge, while in the Governa ipate, whether through ownership or

ment service. otherwise, in the promotion, control, or (g) No customhouse broker shall direction of the business of the broker: knowingly (1) assist a person who has Provided, That nothing herein shall be been employed by a client in a matter, deemed to prohibit any customhouse pending before the Treasury Department broker from acting as a customhouse or any representative thereof to which broker for any bona fide importer or matter such person gave personal conexporter, notwithstanding suclı importer sideration pr gained personal knowledge or exporter may have had his license as of the facts or issues thereof while in the a customhouse broker revoked or sus- Government service, or (2) accept assistpended, or may be disreputable: And ance in any such matter from any such further provided, That nothing herein person, or (3) share fees in any such shall be deemed to prohibit any person

matter with any such person. whose license has been revoked or sur- (h) No customhouse broker shall suz. rendered with prejudice from petitioning gest to a client or a prospective clients the Commissioner to exercise his discre- plan known to be illegal for evading pas. tion to relieve him of the disabilities im- ment of any duty, tax, or other debt of posed by subparagraph (3) of this para- obligation owing to the Governments graph. Any such petition shall be filed (i). Each customhouse broker who no less than 5 years after the revoca

knows that a client has not complied tion of the petitioner's license, or its sur

with the law or has made any error in, or render with prejudice as the case may be. omission from, any document, affidavit, The Commissioner shall not approve any

or other paper which the law requires such petition unless he is satisfied that such client to execute shall advise his the petitioner has refrained from all ac- client promptly of the fact of such non tivities in any way violative of the pro- compliance, error, or omission. visions of this paragraph and is also (j) Each customhouse broker shal satisfied that in all other respects the

exercise due diligence to ascertain the petitioner's conduct has been exemplary correctness of any information which he during the period of disability under this imparts to a client with reference to any paragraph. The Commissioner shall also customs business; and no customhous give consideration to the gravity of the

broker shall knowingly impart to a client misconduct which gave rise to the peti

false information relative to any such tioner's disability. In any case in which

business when such false information

or might be detrimental to the interests such misconduct led to pecuniary loss to

of the Government, the client, or any the Government or to any person, the other person. Commissioner shall also take into ac

(k) No customhouse broker shs count whether the petitioner has made withhold information relative to any reimbursement for the losses incurred. customs business from a client who is

(d) No customhouse broker shall act entitled to the information. in behalf of any person, or attempt to (1) Each customhouse broker shall represent any person, in respect of any promptly pay over to the Government protest or appeal for reappraisement, when due all sums received for the pas. unless he shall previously have been ment of any duty, tax, or other debt or

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