What is the Authorized Economic Operator (AEO) and how do they work?
How effective it would be if the Federal Revenue Service already knew something about the conduct and rigor of exporting companies to be able to deal with inspecting only those that are new to the market or that have a suspicious attitude. With that in mind, the AEO — Authorized Economic Operator — was created, a certificate for those who have already shown that their work is serious and correct.
The issue still raises many doubts, so we called Cristina Santos, specialized in compliance at Allink to clarify some questions about the AEO. In this content you will also understand the advantages of becoming an Authorized Economic Operator and learn about the procedures for doing so. So let’s start with the basics: what defines an AEO?
What is the AEO — Authorized Economic Operator?
The Authorized Economic Operator is any entity that is involved in the transit of goods and has certified with the Federal Revenue Service of Brazil proving that it manages risks effectively.
“Each country calls it a different thing”, comments Cristina, “in Brazil we call it an Authorized Economic Operator”, but abroad, in the United States, what is similar with the AEO is called CTPAT — Customer Trade Partnership Against Terrorism”.
To better understand the concept, just remember the ride or hosting apps: people who are certified by the app receive an additional vote of confidence from those who intend to work with them, it’s the same thing with AEO certification. When a company, for example, proves that it strictly follows the security criteria to do its logistics work, presenting the certificate, it starts to have a higher degree of reliability among the partners and for the Federal Revenue Service.
The AEO, however, is focused on the freight forwarder and not on the shipping agent. The Freight forwarder, within his functions, ends up being a customer of the shipowner, while the shipping agent is the shipowner’s agent in the port.
It is noteworthy that the logistics of the merchandise goes through several intervening parties, from the truck driver, when it passes from the factory and goes to a terminal. Cristina Santos explains a little about the subject: “There are many intervening parties and the global and customs concern was that a program should be set up in which each link in the chain could rely on a second link”, that’s why the concept started to emerge.
How did this concept come about?
“This concept emerged back in the 1990s and was quite small in some European countries,” says Cristina. In Sweden in 1998, the idea was started to facilitate the verification of the products that arrived and left. “After September 11, 2001, this intensified because global security has changed,” recalls Cristina.
It was then that the United States created its equivalent certification, which would be the CTPAT. “When they created this certification, as the United States is a partner of every country in the world, a certain degree of compliance and monitoring of suppliers was already required”, explains Cristina. That is how in the years 2005 and 2006, the World Customs Organization began to give directions on the topic. And in 2014, the Authorized Economic Operator was created in Brazil.
In the beginning, few companies started to seek certification promptly, because of the voluntary nature of the program. “However, little by little, a more comprehensive view of the logistics chain has emerged on the part of companies and everyone has started to demand that partners be certified as AEO”, adds Cristina, “even though it is a voluntary certificate, the flow is pulling one by one, and that makes the chain safer for everyone”.
What are the advantages of becoming an AEO?
If today, when we open the newspaper, we see that many more drugs are being seized, it is because the inspection has been able to focus more on what is really at risk. “The routes and ports that have the possibility of drug trafficking are much more supervised and the resources of the Federal Revenue Service are better used to work with a broader view”, details Cristina, “It stops losing energy with a cargo of a certified company to check another that has a non-certified conduct and that may be suspicious”.
The first advantage is certainly security. And from it, one can describe the other advantages such as the reliability of the partners, easier processing with the Federal Revenue Service and organizational benefits such as better business performance, better internal organization, preference of partners, more control of everything. In the case of an importer/exporter, they will also find clearance benefits, reduced time, will have the cargo less inspected and this will all reflect on their labor costs.
The more companies that are certified, the more they can be focused on risk management. “Before, a lot of time was spent inspecting cargo from companies that were not qualified”, confirms Cristina, “today this is no longer necessary, the company that is certified ends up helping the work of the Federal Revenue Service in combating illegal conduct such as trafficking”. So, is becoming an AEO too complicated? Keep reading.
How to become an Authorized Economic Operator?
The rules are established by the Federal Revenue Service. For it, it is important to know how well the company manages the risks associated with the themes listed in the AEO Program. The application for AEO certification can only be carried out through the AEO System, which is the platform for receiving and distributing documents related to the certification. Access to it is done directly on the Single Portal Siscomex, which we have already presented here on the blog.
It is the legal responsible person before the corporate taxpayer registry (CNPJ) who must carry out the formalization of the certification application. It is indicated that the first access must occur through the Digital Certificate (e-CPF), selecting the option “Legal Responsible”.
The certificate goes through admissibility requirements, general information, eligibility criteria, specific criteria and physical validation. Everything within the system, and you can check it on the Federal Revenue Service page.
The requirements must fill three blocks. “They are requirements on the company’s financial solvency and the eligibility criteria (HR policy, information management and risk management) will also be checked, in addition to security criteria, physical access control and physical security of the facilities and the management of commercial partners”, points out Cristina.
In addition to a satisfactory risk management and commercial records system, the applicant must be ready to present a series of evidences, such as compliance with customs obligations, where its background will be validated. Details are provided by the Federal Revenue Service.
It is also believed that with the situation that arose due to COVID-19, more security criteria are implemented. “What has changed in the AEO work part is not even the physical security of the cargo because it continues to be transported and passes from one establishment to another, but the information has changed its point of departure, and if at any point the information leaves computers in employees’ homes, this should be a concern, as has been the case in several companies”, comments Cristina.
Thus, once the requirements are fulfilled, the AEO certification is obtained! In Brazil, there are already more than 400 certified companies, which are recognized for their safety to facilitate the intense work of the Federal Revenue Service and reduce waiting times and long and costly processes. This is the great objective of becoming an AEO: to be a contributor to the logistics chain with the necessary security!
And if you want to understand more about the logistics chain and still get confused between cargo agency and shipping agency, embark on our content that clarifies the issue. We are waiting for you there!