Study Guide

3. Part 2: Customs Compliance Management

3.4. Case Studies in Risk Management Implementation

The case studies below have been adapted from the WCO Customs Risk Management Compendium and provide a snapshot of the experience of two Customs administrations as they modified their systems and processes and incorporated a Risk Management Framework to underpin their core functions.

Case study 1 – Risk Management Implementation

Jamaica Customs Agency (JCA)

The Jamaica Customs Agency (JCA) has implemented a proactive risk management process. It established a Risk Management Unit responsible for:

n Implementing risk management plans and processes.

n Gathering and collating information; identifying, analysing and reporting areas of risk.

n Developing targets and profiles.

n Establishing and maintaining a risk management database.

n Monitoring the application of risk management remedies across the Agency.

The JCA formulated an Agency Risk Management Policy (2014) to ensure that practices are aligned with the RKC and other international benchmark guidelines, such as the WCO’s SAFE Framework and the Revised Arusha Declaration.

The table below compares the JCA’s previous Customs controls with its current risk-based approach and includes lessons learned.

Previous Approach	Risk-based Approach
100% examinations conducted	Focus on high-risk areas, with minimal intervention in low-risk areas Increased focus on post-transaction compliance assessment Balance between regulatory control and trade facilitation
Lack of coordination and structure within operating environment – “fragmented”	Strategic and holistic approach Centralised risk management coordination
Focus on identifying noncompliance	Focus on identifying both compliance and noncompliance Focus on assessing the integrity of trader systems and procedure
Lack of formal feedback mechanism, limited incentives for compliance	Consultative, cooperative approach Rewards for recognized compliant traders Dual enforcement/client service focus
Unilateral approach & inflexible procedures	Simplification of procedures with appeal mechanisms
Limited automation & IT integration	Information management focus Pre-arrival import clearance Greater integration of systems Intelligence driven

Through the application of risk management techniques and modern practices supported by improved Information Communication Technology (ICT), the implementation of the Automated System for Customs Data (ASYCUDA World) in 2016 centralized the JCA’s operations and created a coordinated approach to risk management across border regulatory agencies.

Implementing a risk management framework has delivered measurable improvements across every dimension of the JCA’s operations — for traders, passengers, and the Agency itself:

Improved trader compliance with laws and regulations

Speedy clearance/processing for legitimate traders and passengers

Approximately eighty (80%) of commercial cargo is released from JCA controls within 24hrs

Establishment of recognition programmes for compliant traders e.g., Authorised Economic Operators (AEO)

Greater transparency in the Agency’s decision-making process

Improved cooperation between traders and the JCA

Improved agency efficiency and stakeholder satisfaction

Better coordinated activities with other border regulatory agencies

Improved risk identification, targeting and selectivity

Key lesson

Transitioning from a ‘gatekeeper’ model to a risk-based approach — supported by ASYCUDA World and aligned with the RKC and SAFE Framework — delivered measurable improvements in compliance, clearance speed, and cooperation with the trading community.

Case study 2 – Post-Clearance Audit

Kenya Revenue Authority (KRA)

The Kenya Revenue Authority (KRA) conducts Post-Clearance Audits (PCAs) to ascertain whether businesses subject to Customs controls are complying fully with all relevant legislative requirements. The PCA is used as a Customs control measure to assess the accuracy and authenticity of declarations through the examination of relevant books, records and financial information kept by companies involved in international trade. The KRA has increased its focus on PCAs to protect the tax base. Specific targets include importers (home use, warehouse, exempt), exporters, clearing agents and transit carriers, among others.

The overriding objective of PCAs is to facilitate faster clearance of goods by shifting from detailed reviews of every Customs declaration to risk-based examination. Triggers for PCAs include:

01 Value fluctuations

Fluctuations in declared values across different consignments of similar products from the same importer.

02 Comparative value discrepancies

Declared values that differ markedly from those of similar goods imported by unrelated buyers.

03 Duty remission schemes

Importers operating under Customs duty remission schemes, which require additional scrutiny to verify eligibility and use.

04 Clearing agent reputation

The reputation or compliance history of the clearing agent used for the declaration.

05 Related party transactions

Transactions between related parties, which may affect the declared value and require verification of arm’s length pricing.

06 Licences and royalties

Importers of products subject to licences or royalties, where additional payments may need to be included in the customs value.

07 Sensitive items

Importers of sensitive items that carry heightened risk of misdeclaration, undervaluation, or prohibited use.

By carrying out PCAs, the KRA seeks to check whether all imports entered through self-assessment are accurately declared, properly valued, and classified for Customs duty purposes. For importers under special Customs schemes, the KRA checks whether all conditions for customs duty drawback, refunds, remissions, rebates, and import and export prohibitions and restrictions (licenses and quotas) are observed. The KRA also confirms whether the importer used the correct Customs Processing Codes (CPCs) to determine the correct Customs duty and import VAT.

Post-Clearance Audit allows Customs to shift resources away from real-time intervention and towards risk-based verification — reducing the burden on compliant traders while strengthening the integrity of self-assessment declarations.