10 January, 2019

As is known, the Ministry of Trade issues Authorized Economic Operator (AEO) Certificates to companies that meet certain criteria, allowing these companies to conduct customs transactions more quickly and through simplified procedures. In return for these simplifications, AEO-certified companies are required to regularly fulfill certain obligations.

1) Changes in AEO Conditions

Under the Regulation on Simplification of Customs Procedures (GİK Regulation), AEO-certified companies are required to notify the Ministry of Trade about certain changes that occur after obtaining the certificate.

a) Changes in AEO Conditions

The GİK Regulation details the conditions required for the AEO certificate and additional conditions required for requesting additional authorizations. For example:

• According to Article 5 of the Regulation:

  • Partners and employees with authorization in customs and foreign trade must not have been convicted of serious crimes (such as smuggling, forgery, bribery).
  • Penalties under the Customs Law should not be frequently and above certain limits.
  • There should be no outstanding confirmed customs, tax, or social security premium debts.

• According to Article 6 of the Regulation:

  • Possession of a stock record system that distinguishes between goods in free circulation and non-free circulation.
  • Establishment of an internal control system.
  • Having an internal system to ensure compliance with customs regulations and accurate declarations.
  • Receiving training in customs and foreign trade regulations.
  • Monitoring changes in regulations.
  • Performing or arranging for regular checks of current customs transactions and document reviews.
  • Informing customs administration of any issues or disruptions in customs compliance.
  • Retaining relevant documents for 5 years from the end of the year of the declaration.
  • Having a sufficient and appropriate business plan for archiving and preventing information loss.
  • Implementing adequate IT security measures to protect the computer system from unauthorized access and secure data.

• According to Article 8 of the Regulation:

  • Facilities should have measures to prevent unauthorized access and intrusions and should implement general security measures.
  • Implement appropriate access control measures to prevent unauthorized entry to loading areas, shipment sites, cargo sections, and transport vehicles.
  • Ensure the reliability of the international supply chain by clearly identifying the persons and companies with whom business is conducted and checking that they have adequate safety and security measures.
  • Conduct periodic security investigations for employees in sensitive positions before and after employment.
  • Ensure active participation of relevant personnel in supply chain security training programs.

Additionally, companies must possess valid ISO 9001 and ISO 27001 certificates as applicable.

To track these conditions, it is crucial for employees to receive regular training, update criminal records frequently, conduct regular customs and supply chain security training, and monitor penalties to prevent automatic reporting and inclusion in the criminal record.

If any changes occur in the conditions required for the certificate or the additional conditions for the used authorizations, these changes must be reported to the customs and trade regional directorate that issued the certificate without delay. In this case, the regional directorate will provide 30 days from the notification date to correct the deficiencies or clarify the situation. If the certificate holder does not make the corrections within the 30-day period, the regional directorate will suspend the AEO status for 30 days to allow the necessary measures to be taken and will notify the relevant company.

2) Situations Not Requiring Notification of Changes

In cases where new service acquisitions, contracts, or commitments occur after certification that were not present at the time of certification, there is no obligation to notify. However, the processes must be carried out in accordance with all conditions met for obtaining the certificate.

3) Changes in Trade Name and Commercial Registry

If there is a change in the trade name, address, location registered in the commercial registry, or commercial registry number of the AEO-certified company, a request for changes in the certificate must be submitted within 5 business days of the publication date in the Trade Registry Gazette or, in the case of a tax number change, within 5 business days from the date of notification by the relevant tax office.

4) Appointment of New Partners or Authorized Persons

If new persons are appointed to the board of directors, individuals owning more than ten percent of the capital, or employees with authorization in customs and foreign trade transactions, the change must be reported to the customs and trade regional directorate within 5 business days of the change. This should be done using the application form (Appendix-1/A). Documentation such as criminal record certificates and declaration forms for new individuals must be submitted within 10 business days from the notification date.

5) Facility Changes

If there are changes in the physical structure of existing facilities, or if new facilities or warehouses are opened or rented, the change must be reported to the customs and trade regional directorate within 5 business days of the change using the application form (Appendix-1/A).

According to a letter issued by the Ministry of Trade (General Directorate of Risk Management and Control) on 21.12.2018, the principles regarding the timing and types of facility notifications required after certification or during update periods have been specified as follows:

A. Facilities Required to be Notified with the Submission of the Application Form:

1. Management office
2. Accounting and archive offices related to customs procedures
3. Information technology office

B. Facilities Required to be Notified with the Submission of the Application Form and Questionnaire:

1. Production facilities (excluding those producing goods for domestic sales only without using imported inputs)
2. Warehouses (excluding those holding goods for domestic sales only) a. Warehouse/facility where export goods are stored and handled. b. Warehouse/facility where goods are placed after completion of import procedures at the customs office.

C. Cases for Facility Notification:

1. Facilities that commence operations after obtaining the AEO certificate must be notified within 5 business days following the actual start date of import and export goods operations.
2. Facilities commencing operations between two update periods must be notified within 5 business days following the actual start date of import and export goods operations.
3. Facilities previously notified but undergoing significant changes (e.g., in area, external boundaries, entry and exit points) must be notified within 5 business days after the changes are completed and the facility is operational.

D. Exceptions:

1. If less than 6 months remain until the update period specified in Article 153, notifications of facilities will be made only with the submission of the application form (Appendix-1/A).
2. If facilities listed in sections A and B are rented for less than 6 months, notifications will be made only with the submission of the application form (Appendix-1/A).
3. Although ISO 27001 and ISO 9001 certificates must be submitted with facility notifications, they can be provided within 6 months from the notification date. ISO certificates will not be required in cases specified in sections 1 and 2.

6) Other Required Notifications

AEO-certified companies must also:

• Update the questionnaire every 3 years to reflect the current status and send it to the customs and trade regional directorate within 15 business days of the end of the 36-month period following the issuance of the certificate.
• Prepare or arrange for the Annual Activity Report to confirm compliance with customs procedures by the end of each 12-month period, and send it within 3 months after the end of each period.

Additionally, to monitor AEO certification, criminal record documents, letters confirming no tax and social security premium debts, financial adequacy reports from certified public accountants, and ISO 9001 and 27001 certificates must be submitted within 15 business days following the end of the third year from the date of certification. The relevance and compliance of these documents with AEO conditions will be reviewed.

CONCLUSION

In conclusion, as seen above, some changes (ISO certificates, criminal records, monitoring penalties, trainings, etc.) should be monitored regularly, while other changes (trade name and commercial registry changes, new facility operations, etc.) must be reported shortly after they occur. Therefore, it is recommended that AEO-certified companies categorize their obligations into "continuously monitored items" and "items to be monitored at certain intervals" and make necessary assignments in relevant sections.