John Rose has an individual customs broker license and a National Permit. Shady is importing eighteen (18) unmounted 1-carat diamonds worth $2,500.00 each for a total of $45,000.00 in his luggage. Shady is arriving from London, England, via private airplane. Shady intends to put the diamonds in rings to sell from his U.S.-based jewelry store. Rose obtains a power of attorney from Shady to be Shady’s broker, and Rose advises Shady that the diamonds do not need to be declared because the diamonds are absolutely duty free. Which statement below is TRUE with respect to any penalty that may be imposed under these circumstances?
How to get there
CBP's broker-penalty guidelines describe this exact fact pattern:
19 CFR Part 171, Appendix C, § VI(D)(1): Section 1641(d)(1)(D), aiding and abetting violationsA broker counsels a client that certain gemstones are absolutely free of duty and need not be declared upon entry into the United States. The client arrives in the United States and fails to declare a quantity of gemstones worth $45,000. A penalty of $30,000 may be imposed against the broker for such counseling. The client would incur a personal penalty of $45,000 under the provisions of title 19, United States Code, section 1497, but the penalty against the broker cannot exceed $30,000.
Each party gets its own penalty. The broker's is capped at the $30,000 maximum per violation under 19 U.S.C. 1641(d)(2)(A). The client's under § 1497 equals the value of the undeclared goods: 18 × $2,500 = $45,000. The answer is C.
Why the other choices are wrong
A) Only the client is penalized: no "one penalty only" rule exists. The broker's counseling is its own violation under § 1641(d)(1)(D).
B) $45,000 against the broker: the broker penalty can't exceed $30,000.
D) $30,000 jointly under § 1641: § 1641 applies to brokers, not the client. The client's liability is a separate § 1497 penalty.
TipExam writers often lift practice questions straight from the examples in Part 171 Appendix C. Skim them before test day.
Sources: 19 CFR Part 171, Appendix C § VI (eCFR); 19 U.S.C. 1497, 1641(d).
CBP answer key: Answer C · 19 CFR 171, Apx C Section VI(D)(1)Source: CBP past exams ↗