Customs Agreement 20-2021

CREATION. The Customs Risk Committee is created, which shall functionally depend on the Executive Director of the Honduran Customs Administration, coordinated by the head of the Risk Management Department.

OBJECTIVES. i. The Customs Risk Committee shall have the purpose of designing, evaluating and approving policies, strategies, the Compliance Plan, systems, methodologies, models, criteria, mechanisms and procedures for efficient risk management. The Committee shall define priorities and recommend measures or adjustments as appropriate, in order to maintain the balance between facilitation and control in the Customs Clearance of goods, applying best practices of international commerce. ii. Ensure that the strategy and programs of risk management are aligned with the objectives and initiatives of the Institutional Strategic Plan, and must assign sufficient resources for its operation, having the necessary qualified personnel and adequate technological tools for the effective application of the policies and strategies that are defined. iii. Approve the mechanisms and criteria that should be applied for the measurement and monitoring of the efficacy of cases or models included in the management of selectivity and post-clearance audit plans. iv. Oversee that customs operations are adjusted to the objectives, guidelines, policies, processes and procedures established for comprehensive risk management, and that compliance with the levels of tolerance and risk exposure limits approved by the committee is met. v. Ensure compliance with the legal framework, regulations, processes, procedures, manuals and internal policies in force in customs matters, proposing the changes that are required.

DEFINITIONS. For the purposes of this Regulation, the following definitions shall be adopted: RISK ANALYSIS: Systematic decision-making process based on the collection and structured analysis of information, in order to evaluate the impact of risk on the Customs Service and propose actions that help mitigate it. RISK APPETITE: The point of tolerance of risk, in relation to the minimum criteria defined by the Customs Risk Committee for foreign trade operations. HUMANITARIAN AID: It is a sector of its own within Official Development Assistance that is defined as assistance designed to save lives, alleviate suffering and maintain and protect human dignity, in prevention or in emergency and/or rehabilitation situations. SELECTIVITY CHANNEL: It is the type of control to be exercised on merchandise through the application of risk analysis methodologies, as a result a selectivity channel will be assigned, which can be red, yellow or green. CUSTOMS CONTROL: It is the exercise of the powers of the Customs Service for the analysis, supervision, inspection, verification, investigation and evaluation of compliance and application of the provisions established in CAUCA and RECAUCA and other regulations governing the entry or exit of merchandise and means of transport from customs territory, as well as the activity of natural or legal persons that intervene in foreign trade operations. It can be permanent, prior, immediate or subsequent to the release of merchandise. PRIOR CUSTOMS CONTROL: It is exercised on merchandise and means of transport, prior to being submitted to a customs regime. PERMANENT CUSTOMS CONTROL: It is exercised, at any time, on Auxiliaries of the Public Customs Function and operators of special regimes with respect to compliance with their operating requirements, duties and obligations. It is also exercised on merchandise that, after its release or withdrawal, remains subject to one of the non-definitive customs regimes, while these are in customs territory, within the customs legal relationship, inspecting and verifying compliance with the conditions of permanence, use and destination. IMMEDIATE CUSTOMS CONTROL: It is that which is exercised on merchandise from its entry into customs territory or from when it is presented for exit and until its release is authorized. CUSTOMS CONTROL POSTERIOR: It is exercised once the release of merchandise has been made, with respect to customs operations, acts derived from them, merchandise declarations, determinations of customs tax obligations, tax payments and the actions of Auxiliaries of the Public Customs Function, officials and other natural or legal persons that intervene in foreign trade operations. RISK CRITERIA: Those rules or standards established by the Risk Management Department and approved by the Risk Committee to compare the level of risk detected during the analysis process of Tax Obligated Parties in order to determine their control level. CAPACITY DEVELOPMENT: It is the process through which individuals, organizations and societies obtain, strengthen or maintain the capacity to establish and achieve their own development objectives over time. ADMINISTRATIVE DISPOSITION: The Customs Service, through its higher authority, shall issue the regulations required to facilitate the application of the matters indicated in the Regulation to the Central American Uniform Customs Code (RECAUCA). RELIEF SHIPMENTS: (Humanitarian Aid and Assistance): The following are considered relief shipments, among others: merchandise, including vehicles and other means of transport, food, medicines, clothing, blankets, tents, prefabricated houses, articles to purify and store water, or other necessities sent as aid for persons affected by disasters. Likewise, equipment, vehicles and other means of transport, specially trained animals, provisions, supplies, personal effects and other merchandise for relief personnel in case of disasters that allows them to fulfill their functions and help them live and work in the disaster area for the duration of their mission. NOTARY: Official who is vested with authority and competence to approve or confirm the authenticity of a document, a specific fact. RISK MANAGEMENT: The systematic application of management practices and procedures that provides the Customs Service with the information necessary to manage movements or shipments of merchandise that present a risk. COMPREHENSIVE RISK MANAGEMENT: Ordered and systematic decision-making process to execute appropriate actions to promote "voluntary" compliance, through the prevention and mitigation of non-compliance and the facilitation of lawful commerce, taking into account the behavior of Tax Obligated Parties and the capacity of the Customs Administration. SELECTIVITY MANAGEMENT: Set of actions or operations related to the administration and management of implementation processes and control of merchandise selectivity. DIGITAL TOOLS: Software resources (some include in their definition the hardware that contains this software) present in computers and related devices, that allows to perform or facilitate all types of activities. RISK INDICATORS: Specific criteria that, taken together, are used as a tool to select and detect movements that would likely not comply with customs legislation. RELEASE OF MERCHANDISE: It is the act by which the Customs Authority allows declarants to dispose of merchandise that has been subject to Customs Clearance. CONTROL MEASURES: Automated controls in the Risk Management Module aimed at the prevention and treatment of customs risks. RISK MANAGEMENT MODULE (MGR): It is specialized software, which has been developed to support functionalities associated with the identification, analysis, evaluation, treatment and monitoring of risk. MONITORING: It is the activity of collecting information, identification and evaluation of risks, in order to document them for their respective control. RISK PROFILE: Set of information about a risk, which normally includes the identification of risk sectors, the measure or type of control to be adopted. COMPLIANCE IMPROVEMENT PLAN: Action plan to increase voluntary compliance and facilitate commerce in an efficient and effective manner, through the identification and prevention of risks; the design of measures to prevent their occurrence and minimize their impact on customs management; and the monitoring of the results of such actions. INSTITUTIONAL STRATEGIC PLAN: It is the plan that sets out the institutional strategic mission and vision, objectives, initiatives, projects and goals, prioritizing their implementation and determining the necessary resources to execute it. RECUSAL: Act by which the authority or public official is removed from the processing of a matter, due to the existence of a legal circumstance that may compromise their impartiality. RISK: Possibility that an event may occur that adversely affects compliance with customs and foreign trade legislation. INSTITUTIONAL RISKS: These consist of the challenges that arise to achieve the established strategic objectives due to internal structural weaknesses. COMPLIANCE RISKS: Those that are related to the mission or business processes of the customs administration, these can be linked to the loss of income (collection), competitiveness, damage or harm to national security or citizen protection. RISK SECTOR: Customs regimes, operations, processes and customs procedures, regulatory areas and other fields that represent an institutional or compliance risk over which the customs authority exercises its competence by directing prevention and/or mitigation actions, as a result of performing specific risk analyses. RISK SYSTEM: Computer system for customs risk management. EMERGENCY OR SPECIAL SITUATION: An event that occurs in an absolutely unexpected manner that can cause damage or alterations to persons, property, services, the environment or the country's economy and that must be addressed immediately and in a special manner. RISK MANAGEMENT UNIT: Entity responsible for establishing the working methodology to execute Risk Management in the customs service at the national level. RISK VALUATION: Estimated degree of risk inherent to any customs activity, intended to allow priorities to be defined in the controls that must be implemented. VOTE IN FAVOR: The affirmative vote used for decision-making. VOTE AGAINST: To cast one's vote or give one's opinion in a meeting or deliberative body, against a matter related to decision-making. CHAPTER II OF THE COMMITTEE

MEMBERS. The Customs Risk Committee shall be composed of the following officials: 1. Executive Director or Deputy Executive Director, who shall exercise the Presidency in the Committee Meeting. 2. National Director of Customs Operations. 3. National Director of Strategic Management and Financial Administration (in those cases where their assistance is required). 4. National Manager of Customs Management. 5. National Manager of Customs Technical Regulations. 6. National Manager of Customs Inspection. 7. National Manager of Customs Intelligence. 8. Head of the Risk Management Department, who shall serve as Technical Secretary. EVENTUAL MEMBERS. - The following shall have the right to speak, but not to vote: 1. Heads of Department and Technical Sections who are invited, when the matters to be discussed so justify, in the absence of the Section Head, the Department Head must assume responsibility for participation in the Committee meeting, being responsible for the criteria that is addressed in that matter. 2. Representatives of Public Institutions or Organizations that directly or indirectly intervene in the Customs Clearance process of merchandise; they shall participate by express invitation of the Executive Director or Deputy Executive Director of the Honduran Customs Administration. The National Directors and National Managers are obliged to attend each convocation, and their participation is non-delegable; if due to illness or justified cause they are unable to attend, they shall notify the Executive Director or Deputy Executive Director and shall delegate their representation to be substituted by whoever corresponds according to the current organizational structure. In case of non-compliance with what is established in this Article, sanctions shall be imposed in accordance with the provisions of the Career System Regulation of Officials and Employees of the Honduran Customs Administration.

FUNCTIONS AND POWERS. The functions and powers of the Customs Risk Committee shall be the following:

• a)

  Hold periodic meetings to develop matters related to the Committee's objectives, as needs require.

• b)

  Follow up on commitments, agreements and results of decisions adopted by the Committee.

• c)

  Review methodologies, tools, policies, procedures and administrative dispositions that have been subject to reforms to identify, evaluate, mitigate, monitor and communicate the different types of risk found in the institution, in customs processes.

• d)

  Review and approve the Compliance Improvement Plan, which shall be sent to the Executive Direction for approval.

• e)

  Present quarterly risk management reports to the Committee.

• f)

  Define, analyze and approve policies related to risk management, contemplating their alignment with the Institutional Strategic Plan, aspects linked to regulatory modifications, internal organization coordination and external coordination with other organizations linked to foreign trade control in the area of its competence.

• g)

  Ensure that the policies and decisions taken by the Committee are applied uniformly throughout the institution.

• h)

  Suggest, analyze and approve appropriate control and facilitation strategies, based on risk management.

• i)

  Submit to the Risk Management Department, proposal of matters to be discussed prior to conducting the Committee meeting, in order to prepare the agenda to be developed. Discuss, analyze and, as the case may be, approve or reject the proposals for risk profiles and criteria, modifications of control measures proposed by the Risk Management Department, as well as the different matters that are presented at each meeting.

• j)

  Present control strategies based on risk management, in analysis studies on economic sectors.

• k)

  Provide operational areas with approaches to minimize risks and ensure that they design and implement actions to address them appropriately.

• l)

  Ensure that necessary resources are allocated to high-risk areas or activities.

• m)

  Establish a Risk Management Subcommittee in order to support the Committee in the analysis, evaluation and prior monitoring of matters to be discussed in the Committee. This Subcommittee shall be composed of officials from the same areas represented in the Committee or from those that the Committee deems necessary. Members of the technical body shall have the obligations and duties described in article 6 of this regulation, except for the powers to approve that correspond to the Committee. The Committee shall issue the rules and regulations under which the Subcommittee shall be governed.

SCOPE OF APPLICATION OF THE RISK SUBCOMMITTEE. The Risk Subcommittee shall be composed of a multidisciplinary technical body made up of officials designated by the directors or managers of the same areas represented in the Committee and by other areas deemed necessary in accordance with the matters to be discussed. It has the function of analyzing strategic matters, proposing alternative solutions, reviewing proposals for selectivity rules, general risk criteria and identifying operational needs that shall subsequently be evaluated by the Committee for decision-making; and must follow up on commitments adopted in the Committee. The Risk Subcommittee shall hold monthly meetings on the Wednesday of the last week of each month from 2:00 pm to 4:00 pm, except when for justified cause this cannot be held on the aforementioned day and time, and must reschedule the date and time for its execution.

DUTIES AND OBLIGATIONS OF COMMITTEE MEMBERS. The sessions of the Customs Risk Committee are private and each member has the following obligations:

• a)

  Sign a Confidentiality Agreement regarding the information and matters discussed in the Committee.

• b)

  Thoroughly analyze the policies, controls, guidelines and specific procedures for risk management that are presented to them.

• c)

  Each member shall be responsible for attending in a timely manner to the agreements and commitments that correspond to them derived from each session. Keep properly informed about the current regulations that govern the Customs Service in the country.

• d)

  Timely inform the Risk Management Department of regulations, processes, procedures and administrative dispositions issued by the Customs Service that involve risk management, so that appropriate controls are established.

• e)

  Provide information relating to risk profiles prepared, with their respective risk valuation.

• f)

  Punctually attend all Committee meetings, participate actively and enrich the discussions on matters presented to the Committee with their knowledge.

• g)

  Justify absences in advance by email addressed to the Executive Director with a copy to the Technical Secretary of the Committee, except in cases of force majeure or act of God.

• h)

  Propose topics to be discussed in Committee meetings.

• i)

  Propose opportunities for improvement in comprehensive risk management.

• j)

  Approve the level of risk appetite, as well as the criteria for facilitation and control of Tax Obligated Parties.

• k)

  Refrain from using information known in the exercise of their functions in the Customs Risk Committee to obtain a benefit or for the benefit of third parties.

• l)

  Ensure impartiality and autonomy in the adoption of decisions, as well as in the applicable regulations, in order to ensure transparency; in this sense, the grounds for impediment and recusal provided in the national legal system shall be applicable to its members.

• m)

  Refrain from opining and voting on matters in which they consider there is a conflict of interest.

• n)

  Justify voting against by indicating the reasons that support the refusal as appropriate in decision-making; and this must be recorded in the minutes. o) Comply with the agreements of the Customs Risk Committee and present a report according to the area of competence within the deadline established in the committee meeting. p) Follow up on actions related to risk management in their area of competence and present a report in committee meetings. q) Sign the minutes of sessions to which they have attended. r) In case of non-compliance with the obligations established in this regulation, sanctions established in the Regulation of the Career System of Officials and Employees of the Honduran Customs Administration and in the national legal system shall be applied.

COMMITTEE MATTERS. Taking as a basis the risk appetite, the following shall be presented before the Customs Risk Committee for approval: With Risk Appetite one can generate: 1. Comprehensive risk management exercising permanent, prior, immediate or post-release customs control of merchandise, being able to implement the use of technology for automation in the exercise of customs control. 2. Strategies for the evaluation and comprehensive risk management prior, immediate or subsequent to the customs clearance of merchandise. 3. Selectivity management during the customs clearance process of merchandise. 4. New schemes that contribute to improving facilitation and control, in the Customs Clearance of merchandise. 5. Creation of an Institutional framework for comprehensive risk management and a Compliance Improvement Plan. 6. Proposal and selection of appropriate topics for training officials and employees of the Customs Administration (Capacity Development). 7. Strategies for the adoption of facilitation and control measures in the Customs Clearance of merchandise in cases of health emergencies, disasters or special situations. 8. Conduct investigations and technical studies on specific topics aimed at solving problems in customs operations. 9. Others as defined by the Customs Risk Committee.

TECHNICAL SECRETARY OF THE COMMITTEE. The head of the Risk Management Department shall serve as Technical Secretary of the Customs Risk Committee permanently and shall have the following functions:

• a)

  Convene meetings with the required notice, indicating the matters to be discussed.

• b)

  Prepare the agenda of the meeting and submit it to the Committee members.

• c)

  Ensure that the information that the members of the Customs Risk Committee must know is available in the required form and timeframes.

• d)

  Verify the quorum of meetings.

• e)

  Prepare the minutes for signature by Committee Members.

• f)

  Properly maintain and keep the Committee's minutes book or digitally.

• g)

  Provide the members of the Customs Risk Committee with the necessary advice and information, corresponding to all Risk Profiles approved in the same.

PERIODICITY. The Customs Risk Committee shall hold minimum monthly meetings on the first Wednesday of each month from 2:00 pm to 4:00 pm except when for justified cause it cannot be held on the aforementioned day and time, and must reschedule the date and time for its execution; extraordinary meetings can also be held at the express request of the Executive Direction or Deputy Executive Direction respectively.

CONVOCATION. The Customs Risk Committee meeting shall be convoked by the Technical Secretary of the Committee, prior to coordination with the Executive Direction, with a minimum notice of three days for ordinary meetings and for extraordinary meetings, it shall depend on the relevance of the matters to be discussed, especially in emergency cases. The notice of convocation shall be distributed through the institution's email and shall contain the following:

• a)

  Indication of the day, time and place of the meeting.

• b)

  The names of the persons convoked.

• c)

  The specific matters to be discussed in the session subject of the convocation.

• d)

  Identification of the persons responsible for developing presentations or addressing specific matters.

QUORUM AND DECISION-MAKING. The Customs Risk Committee shall validly session with the physical attendance of the simple majority of members; the following have the right to speak and vote: Executive Director, Deputy Executive Director, National Director of Strategic Management and Financial Administration, National Director of Customs Operations, National Manager of Customs Management, National Manager of Technical, Regulatory and Customs Policy Management, National Manager of Customs Intelligence and National Manager of Customs Inspection of the Honduran Customs Administration. Risk matters submitted to discussion shall be approved by qualified majority, with two-thirds of the votes of members entitled to vote. All votes shall be counted.

VIRTUAL SESSION. When urgent and unforeseen situations arise that must be resolved immediately, virtual sessions may be held through telephone conferences or digital tools available and authorized by the Executive Director, with the Technical Secretariat of the Customs Risk Committee having the power to convoke through email to the members, sending the proposal whose decision must be adopted the same day through virtual voting. In these situations, a quorum of three (3) members shall be valid, and at least the Executive Director or Deputy Executive Director and a National Director must be present. With the commitment that, subsequently, the rest of the Committee members shall be informed and the decisions made in said virtual session shall be ratified.

EMERGENCY CONTROLS. When by decision of the Executive Direction of the Honduran Customs Administration, emergency controls must be implemented, they shall be limited to one or several Customs Administrations or Customs Warehouses as the case warrants and for the time required. The Risk Management Department shall proceed to systematize them in the Risk Management Module, prior to written instruction provided by the Direction, Management or Department to which the Customs Administration delegates such power, with this instruction containing at least one element of justification for the measure. The Risk Management Department shall be obliged to present the risk profile before the Committee at the next meeting. The Executive Director of the Honduran Customs Administration shall define the period of validity of this emergency measure and in cases of extension or expansion of said validity, it shall be submitted to the Customs Risk Committee. In case of Relief Shipments and National Emergencies, the necessary mechanisms shall be established to prevent the affectation and obstruction of donations in the concept of humanitarian aid destined for the country, for which facilitation measures shall be implemented for simplification in the Customs Clearance of merchandise; the Customs Service must execute the processes, procedures and those that derive from situations of act of God or force majeure according to the eventuality that arises and that detail the treatment that shall be provided to definitive import and its modalities.

MINUTES. The Secretary of the Customs Risk Committee has the function of notary public of the proceedings and decision-making. At the end of each session, he shall prepare the minutes of the corresponding meeting that must be circulated among the attendees for their review. The terms of the Minutes shall be subject to final approval by each of the attendees at the session to which it relates, which must be duly signed by the participants and the secretary respectively. The Minutes shall contain the following elements: a) Minutes Number b) Date of Session c) Names of Members present d) Summary of matters discussed, deliberations, opinions expressed and agreements of the session, indicating for the latter the responsible party, the date of compliance and whether it should be communicated to the Executive Direction. e) Supporting documents when applicable f) Approval or rejection of risk profiles presented when applicable g) Signature and seal of attendees.

ORDER OF THE MEETING. - The meeting of the Customs Risk Committee shall be held at the place designated by the Executive Director, who shall preside over it in accordance with what is established in Article 3 of this Regulation, and must maintain the following order: Opening of the meeting a) Verification of Quorum b) Approval of the agenda c) Approval of the minutes of the previous meeting. d) Follow-up on the control of agreements, if any. e) Analysis of the topics contained in the agenda. f) Approval or dismissal of each of the topics to be discussed. g) Other matters. h) Closing of the session

POWERS OF THE RISK MANAGEMENT DEPARTMENT. In accordance with the functions of this Department, when evaluating the application of risk profiles and finding non-conformity in the percentages of selectivity, it may make the necessary modifications to the controls generated in the Risk Management Module, to maintain the balance between facilitation and control; provided that the controls to be modified are not emergency controls, the latter may only be modified or have their validity closed by instruction from the authority that generated the control. Likewise, it may make the necessary modifications for the correct functioning of the control measures created, provided that they do not modify the objective for which the control was created. -- All modifications made must be documented in the corresponding report, and must be presented before the Customs Risk Committee for incorporation in the session minutes.

PROHIBITIONS FOR MEMBERS OF THE CUSTOMS RISK COMMITTEE: The members of the Customs Risk Committee in the exercise of their functions may not:

• a)

  Disclose information that they know in their capacity as a member of the Committee, even after ceasing their functions.

• b)

  Incur in conduct that may cause a conflict of interest.

• c)

  Hinder the proper course of the deliberations and/or activities of the Committee.

• d)

  Be absent without just cause from the meetings of the Committee. In the event of committing any of the prohibitions described above, the sanctions established in the Career Regime of Officials and Employees of the Honduran Customs Administration or in the national legal system shall be applied as appropriate.

GENERAL PROVISIONS. - This Regulation is mandatory for both the members who make up the Customs Risk Committee and for the officials and employees of the Honduran Customs Administration, who must strictly comply with the agreements derived from the Customs Risk Committee.

APPROVAL AND EFFECTIVE DATE: This Regulation shall enter into force as of the date of its approval, and must be published in the Official Gazette La Gaceta and on the Transparency Portal. LET IT BE PUBLISHED. JUAN JOSÉ VIDES MEJIA EXECUTIVE DIRECTOR HONDURAN CUSTOMS ADMINISTRATION SANDRA PATRICIA FLORES LÓPEZ GENERAL SECRETARY HONDURAN CUSTOMS ADMINISTRATION