Message from WCO Secretary General

January 28, 2005

28 January 2005

Message from WCO Secretary General.

The following message is from the Secretary General of the World Customs Organization (WCO), Michel Danet It is found on the WCO web site, at http://www.wcoomd.org/ie/En/en.html. The theme of International Customs Day, which was celebrated on 26 January, was “Customs and Commercial Fraud”.

The traditional role of Customs has been to collect Customs duties on imported goods that contribute to the revenue of governments. The purpose and significance of this role continues in many of our Member administrations even though, over time, it has evolved to include the protection of society and the security of the international trade supply chain. Commercial fraud has always been a challenge for Customs to contend with, primarily because the incentives for perpetrators to commit revenue related fraud are great and financially advantageous whilst penalties are comparatively low.

The globalization of trade over the recent past has been accompanied by significant increases in the volume and speed of goods moving internationally. This has resulted in increased opportunities to commit Customs fraud. Commercial fraud, often linked to organized crime, is perpetrated in a variety of ways that include revenue and fiscal evasion, through false declaration, misuse of exemptions, and money laundering. Indeed, it is even suspected of being linked to the financing of international terrorism. The UN Security Council Resolution 1373 (2001) notes with concern, that there is a close connection between international terrorism, transnational organized crime, money laundering and other crimes. For many WCO Members, who rely to a large extent on Customs duties for government revenues, commercial fraud deprives these governments of significant collections. This has a serious negative effect on the ability of these governments to finance their fiscal and social development programs. Commercial fraud can have an equally adverse effect on the security and economic well being of both developed and developing countries.

The revenue implications of commercial fraud for Members around the world are staggering. Information from different sources indicates that countries lose hundreds of millions of USD in revenue as a result of commercial fraud. For instance the European Union is said to have lost USD 1,8 billion from 1990-1996, with USD 260 million being lost in 1996 alone. [1]

The WCO has been active in developing tools and instruments for its Members to combat commercial fraud. These include recommendations, conventions and instruments on international cooperation, commercial fraud investigation manuals and courses, risk assessment approaches and indicators, training material for the implementation of the GATT Valuation Agreement, and a variety of e-learning training modules. The WCO’s most recent tool “Guidelines on the development and use of a national valuation data base as a risk assessment tool” has just been issued and is expected to be a useful tool for Members.

In this context one cannot highlight enough the importance of international Customs cooperation. This cooperation is the most effective way in which commercial fraud may be tackled. To establish a legal basis and provide a mechanism for the execution of mutual administrative assistance in the prevention, investigation and combating of Customs offences, and to ensure the security of the international trade supply chain, the WCO Council in June 2003 adopted an International Convention on Mutual Administrative Assistance on Customs Matters (Johannesburg Convention).

In addition, in keeping with the provisions of the Revised Kyoto Convention, the WCO strongly supports the recommendation that Customs shift from exclusive movement control to more audit-based controls. Conducting compliance-measurement exercises on traders through post clearance audit is an appropriate method to verify trade transactions reflected in the books and records of international traders. Customs administrations, i


Topic(s): 
International Initiatives
Information Source: 
World Customs Organization (WCO) / World Trade Organization (WTO)
Document Type: 
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