CBP Ruling Clarifies Customs Business, Addresses AI

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Mar. 20, 2026
By: Chaney A. Finn

U.S. Customs and Border Protection (CBP) concluded that an unnamed foreign company without a customs broker license crossed regulatory lines by performing activities reserved for licensed brokers. In ruling HQ 350722 (Jan. 16, 2026), CBP determined that the company engaged in “customs business” by filing CBP Form 5106 for importers, operating an OCR-based document tool, and potentially deploying an AI classification system in ways that influence entry filings.

By way of background, the CBP Form 5106 (also known as the Importer Identity Form) is the document used to register or update an individual or business as an Importer of Record (IOR), required for importing goods into U.S. Customs territory. CBP stated that submitting CBP Form 5106 on behalf of an importer qualifies as customs business because the form directly supports the entry process. The agency clarified that preparing and filing such a document constitutes a regulated activity, and only a licensed customs broker may perform it for another party. This marks the first time CBP has explicitly stated that completing and submitting Form 5106 on behalf of another party requires a broker license.

The ruling also addressed the company’s AI-powered classification tool used to suggest tariff classifications based on product details such as material and end use. While CBP has previously allowed limited classification assistance, specifically at the six-digit level for purposes such as Importer Security Filings, the agency drew a firm boundary at more detailed classifications. When a tool generates eight- or ten-digit tariff subheadings that importers may use in official entry filings, it steps into the realm of customs business. If the company’s AI tool provides such detailed classifications for goods intended for import, it effectively performs a licensed function without authorization.

CBP allowed some flexibility for the AI tool under narrow conditions. If the system offers only general guidance, operates independently from broker-related services, and includes a meaningful disclaimer that avoids directing final entry decisions, then it may remain permissible. However, if importers use the tool alongside brokers connected through the same platform, and the tool influences how entry documents are prepared, CBP views that as impermissible direction of both the importer and the broker.

The agency took a strict stance on the company’s OCR (optical character recognition) tool used to scan shipping documents and extract key data elements for entry filings. CBP ruled that such activity inherently constitutes customs business because it involves selecting and preparing information intended for submission to the agency. The law covers document preparation in any format, including partial data extraction, and does not require that a final entry actually be filed. By identifying which shipment details matter for entry, the unlicensed company performs a function reserved for licensed brokers.

CBP also reviewed the company’s platform, which connects importers with third-party brokers. While prior rulings permit referral-type services, CBP flagged serious compliance concerns. The company required importers to execute powers of attorney (POAs) through its platform, allowing brokers to act on their behalf. CBP stated that importers and brokers must handle POA execution directly, without intermediaries. The company’s involvement in that process violates regulatory expectations.

Finally, CBP warned that the platform’s built-in chat function risks breaching broker confidentiality rules. Because the system operates on the company’s infrastructure, any sensitive client information shared by brokers could become accessible to the unlicensed entity, potentially violating federal confidentiality requirements. CBP noted that importers themselves may share their own data on the platform without violating those rules.

CBP’s ruling signals heightened scrutiny of digital platforms and AI tools in customs operations, reinforcing that technology providers must avoid performing or influencing regulated brokerage functions without proper licensing.

Should you have any questions regarding customs business, confidentiality, or any other trade-related questions, do not hesitate to contact any attorney at Barnes Richardson and Colburn, LLP.