CBP Ruling on Unlicensed Companies: What Customs Brokers Need to Know About AI, OCR, and “Customs Business”

The growing use of artificial intelligence, automation, and cloud-based technology is transforming the customs brokerage and import compliance industry. Importers and customs brokers now rely on technology platforms to exchange documents, extract data, classify merchandise, and automate entry-related processes. But where does technology end and regulated “customs business” begin?

A recent U.S. Customs and Border Protection (CBP) ruling provides important guidance. In Headquarters Ruling 350722, issued January 16, 2026, CBP examined services provided by an unnamed foreign company that operated an online platform for importers and customs brokers. The company provided four primary services:

• Connecting importers with licensed customs brokers

• Optical Character Recognition (OCR) and import document processing

• AI-powered Harmonized Tariff Schedule of the United States (HTSUS) classification assistance

• Preparing and submitting CBP Form 5106

CBP's conclusions provide an important roadmap for customs brokers, importers, technology companies, and trade compliance professionals evaluating whether automated customs solutions comply with U.S. customs broker licensing requirements.

The central takeaway is straightforward: An unlicensed technology company may provide tools that facilitate customs activity, but it cannot perform functions that constitute “customs business” on behalf of another person without the required customs broker license.

What Is “Customs Business” Under U.S. Customs Law?

The distinction begins with the definition of customs business. Under 19 U.S.C. § 1641 and 19 C.F.R. Part 111, customs brokers must be licensed to conduct customs business on behalf of others. The definition is broad and includes activities involving:

• Entry and admissibility of merchandise

• Classification and valuation

• Payment of duties, taxes, and fees

• Preparation of documents or forms submitted to CBP

• Activities related to preparing those documents

This broad definition has significant implications for companies developing customs technology. A company does not necessarily avoid the licensing requirement simply because it does not physically transmit the final entry to CBP. CBP may look at what happened before the filing. If an unlicensed company is determining information that should appear on an entry, preparing entry-specific information, or making customs decisions on behalf of an importer, CBP may consider those activities to be customs business.

CBP's Four-Part Analysis of Unlicensed Customs Services

CBP's ruling examined four different services and reached different conclusions depending on the nature of each activity.

Service	General CBP Position
Connecting importers with licensed customs brokers	Generally permissible when limited to communication and data transmission
OCR and document processing	May constitute customs business when the technology determines entry-specific information
AI HTSUS classification	General information may be permissible; specific detailed classifications for actual imports can constitute customs business
CBP Form 5106	Preparing and submitting the form for another party constitutes customs business

This distinction demonstrates that not all customs technology is treated the same way.

1. Can an Unlicensed Company Connect Importers With Customs Brokers

Yes—under the circumstances described in CBP's ruling. An unlicensed technology company may generally operate a platform that connects importers with independent, licensed customs brokers when the platform functions primarily as a communication and data-transmission tool. For example, the platform may allow an importer to:

• Upload shipping documents

• Provide information to a customs broker

• Communicate with the broker electronically

• Locate or connect with a licensed customs broker

• Transmit information to the broker

The critical issue is that the technology company is not making customs decisions or preparing and filing customs documents on behalf of the importer.

Technology Platform vs. Customs Broker

This creates an important distinction:

Permissible technology function:

Importer → Platform → Licensed Customs Broker. The platform facilitates the exchange of information.

Potentially impermissible customs function:

Importer → Platform → Platform determines/prepares customs information → Broker. In the second scenario, the technology company may be doing more than simply transmitting information.

Power of Attorney Requirements Are Critical

One area that deserves particular attention is the Power of Attorney (POA) between an importer and customs broker.

CBP regulations require a customs broker to obtain a POA directly from the importer.

An unlicensed technology platform should not become an intermediary in the execution of that POA in a manner that interferes with the broker's direct relationship with the importer.

Customs brokers using technology platforms should therefore determine:

• Who generates the POA?

• Who sends the POA?

• Who receives the executed POA?

• Does the broker communicate directly with the importer?

• Is the technology provider controlling any part of the POA process?

The platform may facilitate communication, but the broker's legal relationship with the importer must remain appropriately structured.

Broker Confidentiality and Unlicensed Technology Platforms

Another important issue is confidentiality. Under 19 C.F.R. § 111.24, customs brokers have obligations concerning the confidentiality of client information. This becomes particularly important when brokers use third-party technology platforms to exchange documents and shipment information. Brokers should understand:

• What information the technology provider can access

• Where information is stored

• Whether the provider can view client documents

• Whether information is transmitted outside the United States

• Whether the importer has authorized the disclosure

• What security controls are in place

CBP's analysis recognizes an important distinction between an importer voluntarily providing its own information to a platform and a broker disclosing confidential client information to an unlicensed third party.

2. Is OCR Document Processing “Customs Business”

This is where CBP's analysis becomes particularly important for customs automation software. OCR technology can scan commercial invoices, packing lists, bills of lading, and other documents and automatically extract relevant information. On its face, this appears to be a simple technology function. However, CBP's ruling makes clear that the regulatory analysis depends on what the OCR system does with the information.

Data Extraction vs. Entry Preparation

There is an important difference between:

Data extraction:

“This document contains product X, quantity Y, and value Z.”

Entry preparation:

“This is the information that should be placed on the customs entry.”

The second activity is much more likely to constitute customs business. CBP has previously addressed similar technology issues. In HQ H326926 (2023), CBP determined that an offshore company was performing customs business when it identified and entered shipment data into a broker's system, even though the broker ultimately transmitted the entry. Similarly, HQ H068278 (2009) involved OCR software developed by an unlicensed foreign contractor. CBP determined that the software was impermissible because it automatically determined what information belonged on customs entries.

Why This Matters for Customs Automation

A licensed customs broker cannot necessarily eliminate the licensing issue simply by reviewing the final entry. If an unlicensed technology provider has already performed regulated customs functions, the broker's subsequent review may not cure the underlying issue. For technology providers, the key question should therefore be:

Is the software merely extracting information, or is it determining what information should appear on a CBP entry?

3. AI Tariff Classification: When Does It Become Customs Business

AI-powered tariff classification is perhaps the most significant issue raised by CBP's ruling.

Modern AI tools can analyze product descriptions, materials, end use, and other characteristics to identify potential HTSUS classifications. This technology can be extremely useful—but CBP's ruling indicates that the context in which classification assistance is provided matters.

Six-Digit vs. Eight- and Ten-Digit HTSUS Classifications

One of the key distinctions is the level of classification provided.

Generally:

• Six-digit HTSUS information may be permissible when provided as general classification information.

• Eight- and ten-digit classifications are more likely to constitute customs business when they relate to specific merchandise that will be imported and entered with CBP.

The distinction is not simply about the number of digits. The broader question is whether the technology is providing general information or making a specific customs classification decision for an actual import transaction.

General Classification Information vs. Specific Import Advice

An unlicensed company may potentially provide a general tariff database or educational classification tool. For example, a general resource might help users understand how a particular type of merchandise is categorized under the HTSUS. The regulatory risk increases when the software is used to answer a question such as:

“What specific HTSUS classification should I use for this product on the CBP entry I am about to file?” That is much closer to performing customs business.

CBP's prior rulings illustrate this distinction. In HQ H290535, CBP determined that a company was improperly conducting customs business despite using a disclaimer because it classified specific merchandise that customers had purchased and intended to import. In contrast, HQ H272798 involved a general tariff classification database that was not tied to specific imports and included a meaningful disclaimer.

Why an AI Disclaimer May Not Be Enough

Technology companies frequently include disclaimers such as:

“AI-generated classifications are estimates. Consult a licensed customs broker.”

That may be helpful, but CBP's rulings demonstrate that a disclaimer alone does not determine whether a service constitutes customs business. CBP will look at the actual operation of the system. If an AI platform:

• Analyzes a specific product

• Generates an eight- or ten-digit HTSUS classification

• Is used for an actual import transaction

• Transfers that classification into an entry system

• Effectively tells the importer or broker what classification to use

Simply labeling the result an “estimate” may not be enough.

The Practical Test

Technology providers should ask:

Does the tool educate the user about classification, or does it make the classification decision for a specific customs entry?

That distinction may determine whether the activity requires a licensed customs broker.

4. Can an Unlicensed Company Prepare CBP Form 5106

CBP reached a much clearer conclusion regarding CBP Form 5106. The form establishes an importer's identity with CBP and is directly related to an entity's ability to transact with CBP and make customs entries. The company in the ruling was completing, certifying, and submitting Form 5106 on behalf of importers. CBP determined that this activity constituted customs business. Therefore, an unlicensed company cannot simply offer Form 5106 preparation and submission as an automated technology service for customers. The fact that the form is completed electronically does not change the underlying regulatory analysis.

Additional Compliance Concerns: Fees and Offshore Operations

CBP's ruling also highlights two issues that customs brokers should consider when working with unlicensed technology providers.

Fee Sharing and Compensation

Under 19 C.F.R. § 111.36(b), customs brokers generally cannot share fees or benefits with unlicensed entities for customs work. This means the structure of a technology agreement deserves careful review. Potentially sensitive arrangements may include:

• Per-entry fees

• Transaction-based fees

• Percentage-of-revenue arrangements

• Referral fees

• Revenue sharing

• Fees based on customs entry volume

A technology company can provide legitimate software services, but the compensation structure should be carefully evaluated to ensure it does not effectively constitute prohibited fee sharing.

Can Customs Business Be Performed Outside the United States?

CBP also addressed the fact that the company operates outside the United States.

Under 19 C.F.R. § 111.3(a), customs business must be conducted within the U.S. customs territory. This creates an additional concern for customs brokers using offshore technology companies. A broker should understand:

• Where the technology provider's employees are located

• Where data processing occurs

• Where customs-related decisions are made

• Whether offshore employees are performing entry-related work

• How the broker maintains responsible supervision

• How the relationship is documented

Simply having a U.S.-licensed broker submit the final entry may not resolve every issue if regulated customs functions have already been performed abroad.

A Customs Broker Compliance Checklist for Unlicensed Technology Providers

Before implementing an AI, OCR, or customs automation platform, brokers should conduct a detailed review of the technology provider's functions.

1. Data Security

Determine if the Data will be secure

• Who has access to importer information?

• Where is the information stored?

• Is information stored outside the United States?

• Can the technology provider access commercial invoices and other confidential documents?

• What cybersecurity and access controls are in place?

2. Importer Communication

Determine whether the platform is simply facilitating communication.

• Does the broker communicate directly with the importer?

• Is the unlicensed company simply transmitting information?

• Is the platform generating or controlling POAs?

• Who sends and receives the POA?

• Is the importer uploading its own information?

• Is the broker uploading confidential client information?

3. Data Extraction and Processing

Determine what happens after documents are uploaded.

• Is the software merely extracting information?

• Is it determining what information belongs on an entry?

• Is it transforming information into entry-ready data?

• Is it automatically populating customs entry fields?

• Is it making customs-related decisions?

4. AI Classification

Determine if the Classification is Compliant

• Does the tool provide general HTSUS information?

• Does it provide six-digit classifications?

• Does it provide eight- or ten-digit classifications?

• Is the classification tied to a specific import?

• Is the classification automatically transferred into an entry?

• Does the software effectively tell the broker or importer what classification to use?

5. Form 5106

Determine

• Who prepares Form 5106?

• Who certifies it?

• Who submits it to CBP?

• Is the technology platform performing these functions on behalf of the importer?

6. Location of Customs Activities

Finally, ask:

• Where is the customs work actually being performed?

• Does the technology provider operate outside the United States?

• Are offshore employees performing entry-related functions?

• Does the broker have a written SOP governing the relationship?

• How does the broker maintain responsible supervision?

What CBP's Ruling Means for the Future of Customs Technology

CBP Headquarters Ruling 350722 is particularly relevant as customs brokers and importers increasingly adopt AI and automation. The ruling does not mean that unlicensed technology companies are prohibited from participating in customs operations. Instead, it establishes an important distinction between technology that facilitates customs activity and technology that actually performs customs business. A platform that allows an importer to communicate with a licensed customs broker may be permissible. A platform that determines the information that belongs on an entry, makes specific tariff classification decisions, or prepares and submits customs forms for an importer may require a customs broker license. This distinction will become even more important as AI systems become capable of making increasingly sophisticated customs-related decisions.

Key Takeaways for Customs Brokers and Importers

1. Not all customs technology is customs business

A neutral technology platform that transmits information between an importer and broker may be permissible.

2. The actual function of the technology matters

CBP looks beyond labels such as “AI tool,” “data platform,” or “automation software.”

3. OCR can create licensing issues

If OCR technology determines what information belongs on a customs entry rather than simply extracting data, it may constitute customs business.

4. AI tariff classification requires careful controls

General classification information may be permissible, while specific detailed classifications for actual imports can cross into regulated customs business.

5. Disclaimers are not a complete solution

A disclaimer does not necessarily protect a company if the underlying activity is still customs business.

6. Form 5106 cannot simply be outsourced to an unlicensed company

CBP specifically determined that preparing and submitting Form 5106 on behalf of another party constitutes customs business.

7. POAs must be handled carefully

Technology platforms should not improperly insert themselves into the direct POA relationship between a licensed broker and importer.

8. Fee structures matter

Transaction-based compensation and fee-sharing arrangements with unlicensed companies may create additional regulatory concerns.

9. Offshore operations require scrutiny

Customs brokers should understand where customs-related activities are actually being performed and how responsible supervision is maintained.

Conclusion: Finding the Line Between Customs Technology and Customs Business

The future of customs brokerage will undoubtedly involve more artificial intelligence, automation, machine learning, OCR, and cloud-based platforms. CBP's Headquarters Ruling 350722 provides an important reminder that innovation must operate within the existing customs broker licensing framework.

The fundamental question is not:

“Does the company use technology?”

It is:

“What customs-related function is the technology performing?”

If the technology simply facilitates communication, transmits information, or provides general educational resources, it may remain outside the definition of customs business. If the technology begins determining classifications, preparing entry-specific information, completing CBP forms, or otherwise making customs decisions on behalf of an importer, the regulatory analysis changes. For customs brokers, the best approach is to conduct a function-by-function review of every technology provider, particularly when AI, OCR, automated data extraction, or offshore personnel are involved. As customs technology continues to evolve, understanding the boundary between automation and regulated customs business will be critical to maintaining compliance while still taking advantage of the efficiency that technology can provide.

Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. CBP rulings are fact-specific, and customs brokers, importers, and technology providers should consult qualified customs and trade counsel regarding their particular operations and technology arrangements.