Not a Cost of Doing Business: DOJ and DHS Issue New Benchmark Guide for Trade Fraud Compliance
On 14 July 2026, the Department of Justice (DOJ) and the Department of Homeland Security (DHS) announced three significant developments in trade fraud enforcement. First, the agencies’ joint Trade Fraud Task Force (TFTF) surpassed US$1 billion in civil and criminal recoveries, penalties, forfeitures, and charged losses in less than one year of operation.1 Second, DOJ and DHS jointly published a first-ever Resource Guide to Trade Fraud Enforcement (the Guide)2 that sets compliance benchmarks. Third, DOJ announced the creation of a new permanent section dedicated to pursuing trade-related offenses.
Together, these developments represent the federal government signaling an effort to make a fundamental and lasting shift in how it approaches customs and trade enforcement and how actors in this space should no longer consider government policing activity as “a mere surcharge” or “cost of doing business.”3
Substantial Financial Impact
DOJ’s announcement touts TFTF’s milestone of US$1 billion in recoveries and charged losses in under one year of operation. The TFTF was established in August 2025 to investigate and prosecute those who defraud the government through material misrepresentations to US Customs and Border Protection (CBP). It spans 35 US Attorney’s Offices nationwide and draws on investigative resources from several executive branch agencies.
The majority of the US$1 billion is from one False Claims Act (FCA) settlement alleging evasion of antidumping and countervailing duties during 2011–2014. Many of the other cases contributing to the recovery number also involve conduct and investigations predating the current administration, though the announcement highlighted several recent charges filed in trade fraud cases and intimates that much more is to come.
The Resource Guide: a New Compliance Benchmark
For most companies, the Guide may be the more consequential development. It outlines the conduct, controls, and self-disclosure factors the government will use to assess corporate culpability. Like the FCPA Resource Guide that DOJ published with the Securities and Exchange Commission almost 15 years ago, the Guide seems designed to serve as a benchmark against which companies can assess whether their trade and customs compliance programs address the government’s enforcement priorities and targeted conduct.
Corporate Compliance
Throughout, the Guide emphasizes the importance of corporate oversight and the need for companies to treat trade compliance as a “core component” of their risk-management strategies, stating: “the era when a company can claim ignorance of its upstream partners’ activities is over.”
It recommends that companies take proactive steps to modernize their compliance structures to reflect complexities and evolving supply chains. Recommended practices include auditing supply chains, verifying representations made by partners, avoiding willful blindness to economic realities (e.g., suspiciously favorable prices), and ensuring a culture of adherence to customs laws from the top down.
DOJ notes that penalties can be severe when violations result from reckless disregard, willful blindness to signs of fraud, or intentional criminality.
Fraud Enforcement Provisions
The Guide makes clear that DOJ views trade fraud as a serious economic crime warranting enforcement at all levels against any actors (including those down-chain) who fraudulently or knowingly receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of goods imported through illegal means.
Several tools at the government’s disposal are listed, and the Guide makes clear that this is not just about administrative penalties that CBP may impose.4 For example, the FCA imposes treble damages and per-claim penalties on any person who fails to pay duties owed to the United States and acts with actual knowledge, deliberate ignorance, willful blindness, or reckless disregard.5 Critically, the FCA’s qui tam provisions allow private citizens—including competitors, former employees, and others with inside knowledge—to bring suit on the government’s behalf and receive a share of any recovery. DOJ has strongly encouraged such suits involving administration priorities, including trade violations.
The criminal provisions against trade fraud are also catalogued in the Guide, emphasizing the potential for prison time (up to 20 years), criminal fines, and forfeiture. These statutes cover smuggling, using false documents, evasion of duties, importing illegal goods, false classifications, and down-chain activity with knowledge goods were imported contrary to law.6
Common Trade Fraud Typologies
The Guide specifies 16 primary fraud typologies that are active enforcement priorities:
- Manifest Fraud: False commodity descriptions or concealment of restricted items in cargo manifests.
- False Country of Origin Declaration and Marking: Misrepresenting the manufacturing country to avoid Section 301 tariffs, antidumping duties (AD), and countervailing duties (CVD), including through transshipment and mismarking.
- False Harmonized Tariff Schedule Classification: Intentionally misclassifying goods to obtain a lower duty rate, including disguising finished goods as parts.
- Undervaluation: Reporting a false, lower value to CBP while paying a higher price.
- AD/CVD Evasion: Avoiding AD/CVD, which can exceed 600% of declared value.
- Shell Company Fraud: Using undercapitalized entities as the importer of record, dissolved after goods clear customs, to avoid duty collection.
- Customs Broker Fraud: Brokers deliberately misclassifying goods, submitting fraudulent invoices on the importer’s behalf, or otherwise facilitating fraud schemes.
- Drawback Fraud: Filing false export claims to obtain duty refunds on goods never actually exported.
- Free Trade Agreement (FTA) Fraud: Fraudulently claiming preferential treatment under FTAs for goods that do not meet the FTA requirements.
- Port Shopping: Attempting to enter goods at a second port that were previously refused entry at another port.
- Evading Food and Drug Administration protections for regulated food.
- Forged product safety or environmental certifications.
- Failure to report defective or dangerous products.
- False declaration of regulated commodities (e.g., agricultural products, pets).
- Illegal timber and wildlife trafficking.
- Importing adulterated drugs and devices.
The Guide also discusses the enforcement tools specific to forced labor, including CBP’s ability to detain, exclude, and seize goods mined, produced, or manufactured, wholly or in part, in the Xinjiang Uyghur Autonomous Region in the People’s Republic of China or by entities on the Uyghur Forced Labor Prevention Act Entity List.7 High-priority sectors for enforcement on this topic include (among others) apparel, cotton, silica-based products, aluminum, polyvinyl chloride, seafood, steel, copper, and lithium.
A New Enforcement Infrastructure
In establishing a permanent prosecutorial office—the Global Trade & Commerce Enforcement Section (GTCES)—within its National Fraud Enforcement Division, DOJ signals its intent to create a lasting shift in the approach to customs and trade enforcement. The section’s mandate is to investigate and prosecute criminal import and trade fraud offenses that undermine American industries, evade revenue collection, threaten public health and safety, finance foreign adversaries, and promote forced labor through illegal trade practices.
Key Takeaways
- Benchmark trade and customs compliance programs against the Guide, which signals how the government will evaluate corporate conduct in a fraud-enforcement context.
- Be aware of indications of conduct potentially fitting within the fraud typologies or forced-labor exposure. Investigate potential red flags and take other measures as appropriate to protect against allegations of willful blindness or deliberate ignorance.
- Down-chain actors (distributors, wholesalers, retailers) have potential exposure and are advised to implement appropriate compliance measures.
- Understand your whistleblower risk via the FCA’s qui tam mechanism and DOJ’s whistleblower programs. Take efforts to mitigate these risks by encouraging internal reporting, investigating suspected misconduct, and engaging in remedial efforts.
- Carefully consider voluntary self-disclosure, which can carry meaningful benefits under DOJ’s Corporate Enforcement Policy, but requires consideration of a number of factors with guidance from experienced counsel.
Contact us to discuss the Guide and its impact on your business. Our team is well-versed in defending FCA, criminal, and administrative enforcement proceedings; counseling on trade and customs compliance; and conducting audits or internal investigations of potential misconduct.8
This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Any views expressed herein are those of the author(s) and not necessarily those of the law firm's clients.
