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ICAO-WCO JOINT-CONFERENCE ON ENHANCING AIR CARGO SECURITY AND FACILITATION
KUALA LUMPUR, MALAYSIA26-28 JULY 2016
RISK MANAGEMENT IN AIR CARGO PROCESSING
Delivered by:
Dato’ Zulkifli bin YahyaDeputy Director General of Customs (Customs & GST)
Royal Malaysian Customs
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• Evolving Role of Customs• The Risk Management Process• Managing Risk• Treatment of Risk by Customs• Benefits of Risk Management• Royal Malaysian Customs’ Experience
• Risk Management Tools• Salient Points
CONTENTS
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DEFINITION OF RISK
“The likelihood of an event occurring thatwill lead to a breach of the law / regulationand as consequence exposes to thepossibility of a loss in revenue or threatensnational security [public health and wellbeing of society]”.Source: Harry Wiskovic.
In short, it is the potential for non-compliance with Customs laws.
“Effect of uncertainty on objectives”.Source: WCO Customs Risk Management Compendium.
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EVOLVING ROLE OF CUSTOMS
• In the olden days, the traditional role of Customs was to collect revenue.
• In modern times, Governments and traders demand that Customs clear cargo at a fast pace to facilitate trade. But at the same time, Customs have to ensure security and public safety.
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• Only a very small percentage of cargo processed by Customs does not comply with Customs law. The majority of the cargo are compliant.
• Customs world-wide practise Risk Management to identify the small proportion of high-risk cargo for document checking and physical inspection. The rest of the cargo is released quickly without physical inspection.
EVOLVING ROLE OF CUSTOMS
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• This guiding principle is known as balancing between facilitation and control, also known as the Customs Dilemma.
EVOLVING ROLE OF CUSTOMS
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THE RISK MANAGEMENT PROCESS
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National Security
Unfair Competition
Revenue Leakage
Public Health & Safety
Well being of society
Supply Chain Security
Effective customs control & trade facilitationOptimal use of resources
MANAGING RISK
MANAGING RISK
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TREATMENT OF RISK BY CUSTOMS
Type of Control Terminology
Release with no physical intervention Green Channel
Review of declaration and the supporting documentation
Yellow Channel
Physically examining the cargo Red Channel
Post Clearance Audit Blue Channel
Investigations Referral
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BENEFITS OF RISK MANAGEMENT
• Achieve an optimum balance between facilitation and controls
• Identify and quantify risk using scientific methods
• Efficient and effective utilization of resources
• Enhance efficiency and effectiveness of Customs controls
• Ensure all employees assume responsibility for managing risks
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ROYAL MALAYSIAN CUSTOMS’ EXPERIENCE
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AIR TRANSPORTATION : INTERNATIONAL PASSENGERS, CARGO AND MAIL HANDLED
(YEAR 2014)
6 INTERNATIONAL AIRPORTS – KLIA, LANGKAWI, PENANG, SENAI, KUCHING, KOTA KINABALU
16 DOMESTIC AIRPORTS
39.984 MILLION INTERNATIONAL PASSENGERS HANDLED
805,884 METRIC TONS INTERNATIONAL CARGO HANDLED
32,117 METRIC TONS INTERNATIONAL MAIL HANDLED
Source: Malaysian Airport Holding Berhad statistics
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RISK MANAGEMENT TOOLS
• Air Passengers
• Drug sniffer dogs• Rovers (undercover officers)• X-ray Scanners (baggage)• X-ray Scanners (body)• Interview and Observation
• Letters & Postal Parcels
• X-ray Scanners • Electronic selectivity system (Customs
Verification Initiative) (CVI)
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• Courier
• Pre-alert Manifest checking • Electronic selectivity system (Customs
Verification Initiative) (CVI)
• Air Cargo
• Electronic selectivity system (Customs Verification Initiative) (CVI)
• Post Clearance Audit
RISK MANAGEMENT TOOLS
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DRUG DETECTOR DOGS
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NUMBER OF SCANNERS
STATESBODY BAGGAGE CARGO POSTAL
‐AIR TOTALAIR LAND SEA AIR LAND SEA AIR*** LAND SEA
F.T. KUALA LUMPURKLIA 3 24 2 29SELANGOR 2 4 4 10JOHOR 2 1 4 7 1 * 4 5 1 25PENANG 4 2 4 10SABAH 8 4 1** 1 14SARAWAK 2 1 1 1 5PERLIS 2 1 3KEDAH 1 2 1 4KELANTAN 3 3LABUAN 2 2PERAK 1 1 2TERENGGANU 1 1MALACCA 1 2 3PCKP, SINGAPORE 2 2SUB‐TOTAL 3 0 2 45 13 24 2 4 16 4 113GRAND TOTAL 5 82 22 4
* Senai, Johore** Kota Kinabalu, Sabah*** Other international airports will be installed with air cargo scanners by end of year 2016
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X-RAY SCANNERS (BAGGAGE)
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HANDHELD NARCOTICS ANALYZER (TRUNARC)
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X-RAY SCANNERS (BODY OF PASSENGER)
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DRUG SEIZURES FROM AIR PASSENGERS01 JANUARY 2015 – 30 JUNE 2016
STATES NO. OF CASES NO. OF PERSONSARRESTED
QUANTITY VALUE (MYR)KG TAB
KLIA 43 23 166 ‐ 24,520,892
NARKOTIK 8 1 22 ‐ 857,374
KEDAH 2 1 46 2,345 4,514,312
PULAU PINANG 3 5 272 ‐ 63,174,112
SARAWAK 7 1 3 55 613,933
SABAH 7 5 50 600 8,864,969
JOHOR 1 2 ‐ 11,894 244,456
PERAK 2 1 3 7 336,734
PERLIS 4 4 187 ‐ 329,900
TOTAL 77 43 749 14,901 103,456,682
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X-RAY SCANNERS (FOR POSTAL PARCELS)
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ELECTRONIC SELECTIVITY SYSTEM
• Cargo screening was started in 2002 at RMC Selangor and later expanded nation-wide
• At end of 2007, risk-based cargo screening was centralised at Headquarters with the setting up of the Customs Verification Initiative (CVI) Unit. However, the states of Penang and Johore perform their own cargo screening
• Makes use of risk indicators to identify cargo risk level as follows:
• High Risk - Physical Inspection• Medium Risk - Document Examination• Low Risk - Direct Release
• Companies with Authorized Economic Operator (AEO) status including those under Mutual Recognition Agreements (MRAs) with other countries, are generally accorded low risk level
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FUNCTIONS OF THE CVI UNIT
Perform risk analysis, identify risk indicators, and establish risk profiles for detection of high-risk cargo suspected of revenue evasion and fraud
Report the effectiveness of the Risk Management process to top management and seek directives
Ensure all traders comply with the law and regulations administered by Customs
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SALIENT POINTS
• Wide use of Non-Intrusive Inspection (NII) techniques (X-ray scanners)
• Usage of multiple tools (e.g. detector dogs, interviews, observations, x-ray, selectivity system, etc.)
• Electronic risk-based selectivity system
• Minimum disruption to air cargo and passenger movement
• Effective in detecting contraband and revenue leakage
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ROYAL MALAYSIAN CUSTOMS
THANK YOU