US DOJ: Intensifies US Import Duty Fraud Criminal Enforcement

• The US Department of Justice now treats import duty fraud as a serious crime, similar to tax fraud, rather than a regulatory infraction.
• The DOJ's Trade Fraud Task Force has recovered over $1 billion since August 2025, while CBP assessed an additional $2.1 billion in commercial trade penalties.
• Two key 2026 changes, the Corporate Enforcement Policy and the National Fraud Enforcement Division, formalize this aggressive new enforcement approach.
• Foreign companies face significant criminal exposure, with entire supply chains vulnerable to prosecution for false customs declarations, leading to fines up to $500,000 per filing, 20-year prison sentences, and asset seizures.
• The Corporate Enforcement Policy offers leniency for voluntary self-disclosure, but foreign companies must weigh US benefits against potential regulatory risks in their home countries.

For foreign companies engaged in US trade, the practical implications of the Fraud Division's mandate are particularly significant.

The United States Department of Justice (DOJ) has fundamentally reshaped its approach to trade violations, now classifying import duty fraud as a serious criminal offense rather than a mere regulatory infraction. This significant policy shift treats the evasion of import duties as a crime against government revenue, akin to tax fraud, marking a departure from previous enforcement paradigms. The impact of this intensified focus is already evident, with the DOJ's Trade Fraud Task Force having recovered, penalized, forfeited, or charged over $1 billion since its inception in August 2025. Concurrently, US Customs and Border Protection (CBP) has assessed an additional $2.1 billion in commercial trade penalties during the current fiscal year, highlighting a comprehensive crackdown on trade non-compliance.

This transformation in US import duty fraud criminal enforcement was formalized through two pivotal developments in 2026. In March, the DOJ introduced a department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), establishing standardized guidelines for corporate cooperation and potential leniency. This was followed in August by the publication of enforcement priorities for the newly established National Fraud Enforcement Division, a specialized prosecutorial sub-department. These changes underscore a broader governmental commitment to combating fraud, echoed by the US Securities and Exchange Commission's (SEC) announcement on August 5, 2026, of a new Financial Reporting and Accounting Unit dedicated to pursuing accounting and financial reporting fraud.

The DOJ's Corporate Enforcement Policy (CEP), rolled out in March 2026, offers a clear framework and strong incentives for companies to report wrongdoing. Under this policy, a company that voluntarily self-discloses violations, cooperates fully with investigators, and undertakes appropriate remediation can entirely avoid criminal charges. The process for engaging with the DOJ has been streamlined, replacing previous overlapping requirements with a single disclosure obligation that applies uniformly across all DOJ components. This aims to simplify compliance and encourage transparency.

To qualify for a declination of prosecution under the CEP, companies must report issues as soon as practically feasible, and in no case later than 120 days after receiving an internal whistleblower complaint. Beyond avoiding criminal charges, cooperating companies can also benefit from substantial reductions in fines. Those deemed to be on a "near miss" track may see reductions ranging from 50% to 75%, while other cooperating entities can still secure up to a 50% reduction. Investigations remain subject to standard limitation periods, typically ranging from five to ten years, and the DOJ is now required to publicly detail the credit awarded to companies for their cooperation, enhancing accountability and transparency in the enforcement process.

Effective August 24, 2026, the National Fraud Enforcement Division, or Fraud Division, represents a formidable new arm of the DOJ, specifically tasked with prosecuting a wide array of criminal frauds. Its authority spans internal revenue, trade fraud, monies owed to or paid by the US government, and healthcare fraud, alongside general criminal fraud cases. The division's five core priority themes include public trust and financial integrity, health care, internal revenue, global trade and commerce, and corporate misconduct, signaling a comprehensive focus on areas critical to the US economy and public interest.

For foreign companies engaged in US trade, the practical implications of the Fraud Division's mandate are particularly significant. The new framework dictates that if goods enter the US with an incorrect customs declaration, and any party within the supply chain can be shown to have contributed to that false filing, the entire chain becomes vulnerable to criminal prosecution. This expansive reach extends beyond the US-based importer to include foreign manufacturers, trading companies, customs brokers, and even parent companies. The potential US import duty criminal penalties are severe, encompassing fines of up to $500,000 per false filing, prison sentences of up to 20 years for implicated individuals, and the seizure of any assets held by the company in the US, including bank accounts, goods in transit, and funds owed by US customers. The Fraud Division is designed for rapid action, with prosecutors strategically deployed nationwide to coordinate charges with local US Attorneys' Offices.

The intensified US import duty fraud criminal enforcement landscape presents a complex strategic dilemma for foreign companies, particularly concerning the benefits of DOJ voluntary self-disclosure leniency. While the Corporate Enforcement Policy offers a clear path to mitigate criminal exposure in the US, reporting wrongdoing to US authorities may simultaneously trigger obligations to report to regulatory bodies in a company's home jurisdiction. For instance, an Indian business disclosing to the DOJ might also be required to inform regulators such as the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India, potentially initiating regulatory actions and risks in their domestic market.

Company Boards face the difficult task of weighing the advantages of US leniency against the potential for adverse regulatory consequences at home. This decision may need to be made even before internal investigations are fully concluded, adding pressure to an already intricate situation. The aggressive posture of the National Fraud Enforcement Division, coupled with its capacity for swift action and coordination with local US Attorneys, underscores the urgency for foreign companies to critically review their trade compliance programs. The broad scope of the new framework means that foreign companies involved in US trade fraud must understand their heightened criminal exposure and carefully consider the multi-jurisdictional implications of any disclosure strategy.

Lawyers and compliance officers advising foreign companies importing into the US must immediately review trade compliance programs to mitigate criminal exposure under the new US Fraud Division's aggressive enforcement. They should also counsel clients on the DOJ's Corporate Enforcement Policy, balancing the benefits of self-disclosure with potential regulatory risks in their home jurisdictions.

Source: Original reporting via legal intelligence