Following a lengthy application process and intense scrutiny by a team of SARS Validators, the Commissioner for SARS has approved BIL as a Level 2 accredited Authorised Economic Operator (AEO). To achieve AEO-S status, BIL participated in the SARS AEO programme specifically designed to prove adherence to compliance and supply chain security regulations based on the internationally recognised SAFE Framework of Standards adopted by the World Customs Organisation (WCO).

What is an AEO programme?

In 2005, the WCO introduced the AEO programme to establish a global system for identifying private companies that provide significant security assurances regarding their involvement in the supply chain.  The aim of the AEO programme is to maintain a proper balance between heightened security requirements and the facilitation of legitimate trade. In essence the AEO concept is a deal struck between government and trade resulting in a partnership programme between the customs authority and the economic role players. If a business proves to customs that it sufficiently self-regulates and complies with customs regulations, it expects to undergo predictable and rapid processing of cargo.

What does the SARS AEO programme entail?

The SARS AEO programme further develops and builds upon the Customs Preferred Trader programme, which was launched in May 2017 as a trade facilitation initiative. The main objective of the Preferred Trader Programme was to move away from the traditional Customs gate-keeper approach to a more risk-based approach. The Preferred Trader Programme was only focussed on importers and exporters.

On 23 July 2021, the Rules under Section 64E of the Customs and Excise Act, 91 of 1964, were amended to widen the scope of participation in the SARS AEO programme and to introduce two different levels of accreditation. The Rule amendments allowed more role players in the supply chain to participate, including importers, exporters, manufacturers, warehouses, distributors, clearing agents/brokers, transporters, carriers, freight forwarders, etc. 

The Rules allow for 2 levels of accredited client status:

Level 1 – AEO Compliance

Level 2 – AEO Safety & Security

BIL’s accreditation journey

Following numerous internal compliance drives and engagements with SARS, BIL applied for Level 2 AEO-S accredited client status on 27 October 2022. Level 2 accreditation involves more stringent compliance requirements both for qualifying and applying. To be eligible for consideration, applicants must ensure that their premises, buildings and facilities have adequate and appropriate security measures.

Among various qualification and disqualification factors, Level 2 accreditation requires having no outstanding taxes, interest, penalties or other amounts and proving to SARS a record of compliance for five years preceding the submission of the application. As part of the latter stages of BIL’s AEO accreditation application, a validation visit by SARS took place from 16 to 19 May 2023 at our head office in Greenstone and various BIL facilities. The objective of the validation was to assess the effectiveness of the procedures and measures implemented by BIL to address compliance and security risks within the supply chain process.

Various BIL departments and divisions stepped forward to present systems, policies, procedures and other internal control measures to the SARS Validation team in a brilliant display of camaraderie. BIL set the bar extremely high for any accreditation applicant who may follow and received praise from the SARS Validation team.

What is next for the SARS AEO programme?

Mutual recognition of AEOs is a key element of the WCO SAFE Framework of Standards to strengthen end-to-end security of supply chains and to multiply benefits for traders. AEOs enjoy mutual recognition in different countries, which can help businesses forge new partnerships and expand their operations across borders. Currently the AEO programme has been mutually recognised by the SACU Member States (Botswana, Eswatini, Lesotho, Namibia and South Africa), China and Uganda. Under the signed mutual recognition arrangement (MRA), signatory countries shall recognise and accept the AEO status of each other’s traders, which means beneficiaries can enjoy benefits in multiple countries that have an MRA in place with SARS.

There are working arrangements with Russia, USA and Brazil towards signing MRAs. Cooperation with other government authorities and alignment of programmes have been identified and recognised as a key element for the further development of the SARS AEO programme.

Conclusion:

SARS is busy shifting the focus from singular case management to assessing entities’ overall compliance with Customs regulations. Ensuring good compliance levels will become all the more crucial for future applications for registration and licensing with SARS. Achieving Level 2 AEO-S accreditation is a massive accomplishment for BIL. More important is the retention of the accreditation, as SARS may withdraw the accreditation at any given time due to non-compliance. This is not only related to our Customs Department, but the business as a whole. Be sure to be on the lookout for the AEO logo on future BIL communications!