Remember way back in 2002, when the Canada Border Services Agency (CBSA) introduced the Administrative Monetary Penalty System or AMPS as it has become affectionately known?

The thinking behind AMPS at the time was fairly straightforward -the threat of monetary penalties for non-compliance with Canadian Customs laws would encourage better corporate control with respect to importing, exporting, warehousing, and transporting international freight.

On one level that makes sense. Sanctions are always a necessary part of a compliance strategy. CTA accepts that a penalty structure is necessary. However, in order to be effective, such programs also need to be fair. They cannot simply be a cash grab by government. Since the inception of the program, CTA has maintained that under the current AMPS regime, the level of penalties can be so high as to not -by any reasonable measure -match the crime.

For example, administrative errors can result in penalties as high as $25,000. AMPS penalties can range from hundreds for such things as missing driver qualifications to tens of thousands of dollars for failure to keep records for a period of six years. Penalties typically double on second offence, and double again if a third infraction is incurred, regardless of the timing of the infraction -meaning, if the carrier was found to have not reported freight to CBSA three times in a day, they could be subject to the penalty three times that day at incremental increases.

Compounding the problem is the fact that the AMPS system does not account for volumetrics. In other words, the system does not recognize that the greater the volume of goods a carrier moves, for example, the greater the risk of violations and therefore the greater the exposure to the compound AMPS penalties.

Another reality is that a carrier can be assessed AMPS penalties for violations that it is really not responsible for. A driver may be transporting a sealed trailer of freight without knowledge of an extra pallet that the shipper added at the last minute.

Upon discovery, the carrier is liable for not knowing that the shipper’s paperwork did not match what was actually shipped. Truckers are an easy target. Exacerbating this problem is that AMPS violations are also considered absolute liability offences, meaning there is no recourse to a due diligence defence, which is a key feature of our democracy. Unless there is some technical glitch in the way the penalties are handed out, you are guilty as charged, regardless of the circumstances.

As a result, CTA has long called for a restructuring of AMPS so that penalties are more in line with the seriousness of the violation. CTA has called for a risk management approach and for the introduction of a structured appeals process.

Over the last few years, CTA has participated on a CBSA-led committee established to review the AMPS penalties. The role of the committee was to investigate ways to introduce a more simplified approach to penalties based on risk, to reduce the administrative burden associated with AMPS, to implement a more practical appeals process, and ultimately to encourage compliance.

Some good progress has been made. For example, some 246 AMPS contraventions have been reduced to 79 and classified into four categories of risk: National Security; Health and Safety; Economic; and International Commitments. Within these four criteria, there are three escalating penalty levels. Penalties for most AMPS contraventions have been reduced, but the most serious offences, especially involving national security, remain significant.

Responding to CTA’s recommendations, CBSA’s national framework will ensure consistency in the application of penalties.

Also, based on feedback from CTA, CBSA has introduced a 30-day period of non-escalation of penalty levels to allow carriers to address root causes of non-compliance without being subject to increased penalties. CBSA is also working on the development of a more substantive appeals process.

The first of these changes to the AMPS regime will begin in April 2010.These include:

• Changes to penalty amounts based on risk factors. Penalties will be flat rates with very few penalty amounts based on value for duty. Exceptions to value for duty-based penalty amounts involve controlled and restricted commodities;

• Master Penalty Document edits will initiate to provide clarity on contravention guidelines; this will be ongoing through October 2010;

• CBSA internal quality controls aimed at improving consistency and application of penalties, monitoring, review and officer training.

CTA welcomes the changes to the AMPS regime implemented thus far. These initial changes represent a good-faith effort by CBSA to engage stakeholders in order to achieve mutually beneficial goals that improve legitimate commerce, reduce overly punitive and/or draconian consequences; and to, encourage compliance.

There is still a lot of work to do. Several key issues still require further co-operation and resolution. Issues relating to fault, volumetrics and the absolute liability nature of AMPS penalties will be the subject of further discussions between CTA and CBSA in the months ahead.

-David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.