Of the four choices below, which business relationship may Tracy, a licensed customs broker and sole proprietor of her brokerage, maintain without violating CBP regulations?
How to get there
Three of these break a specific rule. The fourth fits an express exception:
19 CFR 111.42(b): Client exceptionNothing in this section will prohibit a broker from transacting customs business on behalf of a bona fide importer or exporter who may be notoriously disreputable or whose broker license is under suspension or was cancelled "with prejudice" or revoked.
Representing a disreputable client is allowed, as long as the client is a bona fide importer and the broker is acting for it as a client. X-Logistics is exactly that. A is permitted.
Why the other choices are wrong
B) Sharing fees with a suspended broker: § 111.42(a)(4) bars a broker from knowingly sharing fees with anyone whose license is under suspension, cancelled with prejudice, or revoked. Accepting her referrals is also accepting "assistance in the furtherance of customs business" from her (§ 111.42(a)(3)).
C) Dinner for a DHS rulings attorney: § 111.34 prohibits trying to influence a DHS representative in a pending matter "by bestowing any gift or favor or other thing of value." A dinner in exchange for discussing rulings under review is exactly that.
D) Keeping a convicted felon on staff: under § 111.53(e), knowingly continuing to employ a person convicted of a felony without written approval from the appropriate Executive Director, Office of Trade, is grounds for suspension or revocation. Once Tracy found out, she had to seek approval or end the employment.
Trap!
"Notoriously disreputable" sounds disqualifying. But § 111.42 only bars working with or for such people (employment, fee sharing, control). It expressly allows serving them as clients when they're bona fide importers or exporters.
Sources: 19 CFR 111.42; 111.34; 111.53(e) (eCFR).
CBP answer key: Answer A · 19 CFR 111.42; 19 CFR 111.53; 19 CFR 111.34Source: CBP past exams ↗