EUROPEAN COMMISSION Brussels, 18.1.2021 SWD(2021) 2 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Third Progress Report on the Implementation of the EU Strategy and Action Plan for Customs Risk Management {COM(2021) 9 final}



TABLE OF CONTENTS 1. Introduction 1.1. The Strategy and Action Plan for customs risk management 1.2. The previous progress reports 1.3. Third progress report (2018-2020): A response to the Council’s invitation 1.4. The process of drafting the third progress report 2. The Progress Report by objective 2.1. Objective 1: Improve data quality and filing arrangements for effective risk management 2.1.1. The legal framework 2.1.2. The Union Customs Code evaluation 2.1.3. The development and implementation of appropriate IT solutions 2.1.4. UCC Import Control System upgrade – ICS2 13 2.2. Objective 2: Ensure availability of supply chain data, sharing of risk-relevant information and control results among customs authorities to analyse and mitigate risks, and ensure equivalent treatment of economic operators. 14 2.2.1. Modification to the legal base 14 2.2.2. Development and implementation of appropriate IT solutions 14 2.2.3. Proposed solutions for traceability of goods’ movement during various customs control stages 14  The Surveillance 3 System (SURV3) 14  The common information sharing environment (CISE) 15

 The Digital Transport and Logistics Forum (DTLF) 16  The eManifest pilot project 17  The Trade Control and Expert System (TRACES) 17  AFIS - CSM 18 2.3. Objective 3: Implement the concept of ‘Assess in advance — control where required’ to respond adequately to identified EU and national risks while maximising efficiency in the use of resources and fluidity of the supply chain 18 2.3.1. Methodologies to implement the concept of ‘Assess in advance – control where required’ 18 2.3.2. Priority Control Area (PCA) 19 2.3.3. Safety 19 2.3.4. Financial Risks 19 2.3.5. Intellectual Property Rights (IPR): 20 2.3.6. Product safety and compliance 21 2.4. Objective 4: Strengthen capacities to secure equivalence in effective implementation of the common risk management framework and to increase responsiveness to newly identified risks 22 2.4.1. The Common Risk criteria (CRC) 22 2.4.1.1. Financial Risk Criteria 22 2.4.1.2. The evaluation of the existing Common Risk Criteria (CRC) on Safety and Security 22 2.4.2. The Customs Risk Management System (CRMS) 22 2.4.3. Actions taken by the Member States under Objective 4 23 2.4.3.1. Methodology used to collect information from Member States 23 2.4.3.2. Customs administrations’ level of priority of improving CRMF’s implementation 24 2.4.3.3. Status of actions aimed at improving the implementation of the CRMF 24

2.4.3.4. Analysis 25  IT and data resources 25  Internal systems 26  Systems, strategies and plans 26  Common risk criteria and the exchange of risk information 26  Other activities 27 2.4.3.5. Developing capacities 27  Improving national risk management systems / engines 27  Preparations for ICS2 29  Measures to tackle undervaluation fraud 29  Other measures 29 2.4.3.6. Cooperation / coordination 31  Use of tools for the exchange of customs information 31  Collaboration forums and project groups 32  Seminars and workshops of the Customs 2020 programme 33  Bilateral and multilateral cooperation / coordination with other Member States 33 2.4.3.7. Results – strengthened capacities 34  Higher quality / more comprehensive / efficient / timelier national customs threat and risk assessments. 34  Better risk management thanks to more consistent / effective sharing and deployment of national customs threat and risk assessments in the CRMF. 35 2.4.3.8. Outcomes 36

 Enhanced cooperation and sharing of risk information. 36  Enhanced financial risk management. 37  Better risk analysis through implemented / improved IT solutions. 38  Better risk analysis through recruitment and training of customs officers. 38 2.4.3.9. Encountered challenges, difficulties and barriers 39 2.4.4. Other actions taken by the Commission under Objective 4 40 2.4.4.1. ICS 2 Context 40 2.4.4.2. Customs 2020 project group on post-clearance audit 41 2.4.4.3. Development of EU common risk criteria under the CRMF. 42  Cash Controls 42  Air Cargo Security 42  Drug Precursors 42  Cultural goods 43  Firearms 43  Wildlife trafficking 43  Waste 44  F-GAS 44 2.5. Objective 5: Promoting interagency cooperation and improving information sharing between customs and other authorities at the Member State and EU level to ensure effective risk management 44 2.5.1. Actions taken by the Member States under Objective 5 44 2.5.1.1. Activities and outputs 44

 Other law enforcement, including intelligence 46  Environment 49  Transport 50  Interagency cooperation with border guards 51  Animal, food, feed and plant health and safety 52  Product safety and compliance 53  Intellectual property rights (IPR) 54  Tax 55  Non-proliferation and conventional weapons 55  Cultural goods 56  Health protection 56  Other 57 2.5.1.2. Results – Improved integration/utilisation of risk information 58  Improved awareness / understanding of existing and emerging risks. 58  Increased numbers of seizures 59  Creation of new and adaptation of existing risk profiles. 59 2.5.1.3. Outcomes 60  Improved risk management practices 60 2.5.1.4. Encountered challenges, difficulties and barriers 62 2.5.2. Other actions taken by the Commission under Objective 5 63

 Product safety and compliance 63  Wildlife 63  Forest Law Enforcement Governance and Trade (FLEGT) 64  IPR 64  Traditional own resources 66  VAT 67  Waste 67  F-GAS 67  Cash controls 67  Health and safety 67  Official Control Regulation (OCR) 67 2.5.3. The European agenda on security 69  Firearms 70  Interagency cooperation with border guards 70  Strengthening the EU Authorised Economic Operator (AEO) programme 71  The EU Policy Cycle / EMPACT – involvement of the customs authorities – cooperation 71  The Customs Cooperation Working Party (CCWP) Action Plan 74  Modernisation of EU export control system 74 2.6. Objective 6: Develop cooperation with trade to secure and facilitate legitimate trade 76 2.6.1. Actions taken by the Member States under Objective 6 77

2.6.1.1. Activities and outputs 77  Cooperation 78  Strengthening the AEO Programme via efforts to raise awareness among AEOs about AEO benefits 80  Strengthening the AEO Programme via concepts for measuring and monitoring its implementation 80  Other 82 2.6.1.2. Results 83 2.6.1.3. Outcomes 83  Improved risk management practices 83 2.6.1.4. Encountered challenges, difficulties and barriers 85 2.6.2. Actions taken by the Commission under Objective 6 86 2.6.2.1. e-AEO direct trader access 86 2.6.2.2. Strengthening the robust implementation and awareness raising of the AEO programme 86 2.6.2.3. Detection technologies 87  PROFILE 87  PEN-CP (Pan-European Network of Customs Practitioners) 87 2.7. Objective 7: Tap the potential of international cooperation, to improve risk management of the supply chain, for better identification of risks, more effective risk mitigation and cost reduction for operators and authorities 88 2.7.1. SSTL 88 2.7.2. Bilateral relations 89  Exchanges of information 89  Customs security agreements 89

 EU - Norway dialogue on dual use. 89  Belarus 90  Ukraine 90  Russia 90  Moldova 90  Georgia 91  United States 91  Canada 91  China 91  Japan 91 3. input from member states to support future developments for the post-2020 period 92 3.1. Main achievements through the current Risk Management Strategy, according to the Member States 92 3.1.1. At the national level 92 3.1.2. At the EU level 94 3.2. Key challenges currently faced in customs risk management 95 3.2.1. Internal challenges 95 3.2.2. External challenges 95 3.3. Priorities for the future 97 3.3.1. Customs administrations’ priorities 97 3.3.2. How a successor to the strategy could support the priorities of Member States 99

 Ensuring the availability and quality of data. 99  Development / revision of common risk analysis supporting tools 99  Training for data analysts at the EU level 100 4. Performance and monitoring framework 101 4.1. The Strategy’s intervention logic 101 4.2. The indicator framework 105 4.2.1. Developing the indicators for the new strategy 105 4.2.2. Indicator tables 106 5. ANNEX: IMPLEMENTATION TABLE 115 5.1. Objective 1: Improve data quality and filing arrangements for effective risk management 115 5.2. Objective 2: Ensure availability of supply chain data, sharing of risk-relevant information and control results among customs authorities to analyse and mitigate risks and ensure equivalent treatment of economic operators 117 5.3. Objective 3: Implement the concept of ‘Assess in advance - control where required’ to respond adequately to identified EU and national risks while maximising efficiency in the use of resources and fluidity of the supply chain 119 5.4. Objective 4: Strengthen capacities to secure equivalence in effective implementation of the common risk management framework and to increase responsiveness to newly identified risks 120 5.5. Objective 5: Promoting interagency cooperation and improving information sharing between customs and other authorities at the Member State and EU level to ensure effective risk management 122 5.6. Objective 6: Develop cooperation with trade to secure and facilitate legitimate trade 125 5.7. Objective 7: Tap the potential of international cooperation, to improve risk management of the supply chain, for better identification of risks, more effective risk mitigation and cost reduction for operators and authorities 128





Abbreviations and acronyms AEO Authorised Economic Operator AES Automated export system AFIS Anti-fraud information system AI Artificial intelligence AIS Automated import system AM Mutual assistance (assistance mutuelle) AN Arrival notifications Archeo Electronic information exchange platform managed by the World Customs Organisation AVSEC Aviation security B2C Business-to-consumer BAPLIE Bayplan/stowage plan occupied and empty locations message BCP Border control points BSTF Baltic Sea Task Force CBRNE Chemical, biological, radiological and nuclear defence CCN Common Communication Network CCS Cargo Community System CCU The Central Coordinating Unit CCWP Customs Cooperation Working Party CEG CRM Customs Expert Group, Customs Control and Risk Management Section CELBET Customs Eastern and South-Eastern Land Border Expert Team CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CIVIC Common intervention on vulnerability in chains CLP CMRC Classification, Labelling and Packaging Regulation Cash movements risk criteria & standards COPIS EU-wide anti-counterfeit and anti-piracy information system CORE Supply chain management and supply chain security project co-funded by the European Commission COVID-19 Coronavirus disease 2019 CRC Common Risk Criteria CRMF Common Risk Management Framework CRMS Customs Risk Management System CUP Customs Union Performance DEMETER Joint operation targeting illegal movements of waste ECHA European Chemicals Agency EC European Commission ECS Export control system EEA European Express Association EIS European information system ELO The central excise liaison office EMPACT European multidisciplinary platform against criminal threats ENS Entry summary declaration EO Economic operator EORI Economic Operators Registration and Identification EU European Union FORUM Forum for Exchange of Information on Enforcement FOS Framework of Standards FRC Financial Risk Criteria GDP Gross domestic product GDPR General Data Protection Regulation HYGIEA Joint operation related to combating counterfeiting and customs IPR enforcement for fast moving consumer goods ICARUS Contact group of customs managers working in the major EU airports ICS Import Control System IoT Internet of Things IPR Intellectual property rights IT Information technology JAD Joint Action Day JCO Joint Customs Operations LFCG Land Frontier Contact Group MAR-INFO Group of partners from northern and southern regions, working to prevent smuggle of drugs, drugs precursors, high tax goods, and goods related to terrorism and organised crime in the maritime area MASP Multi-annual Strategic Plan MOA Memorandum of Agreement MOU Memorandum of Understanding MRA Mutual recognition agreements MS Member State MSA Market Surveillance Authority NCTS New Computerised Transit System NES National Entry System NPIU National Passenger Information Unit NPS New psychoactive substances NSW National single window OAP Operational action plan OCC Operational Coordination Centre OCG Organised Crime Group ODYSSUD Contact group of customs managers working in the major southern ports OLAF European Anti-fraud Office OPSON Joint operation targeting fake and substandard food and beverages PARCS Expert group on the protection of health, cultural heritage, the environment and nature PCA Priority Control Area PCA Partner Competent Authority PEN-CP Pan-European Network of Customs Practitioners PIU Passenger Information Unit PLACI Pre-loading advanced cargo information PN Presentation notifications PNR Passenger Name Record PROFILE Horizon 2020 research project that leverages modern data analytics and new data sources for effective customs risk management RACER Relevant, accepted, credible, easy to monitor and robust RALFH Contact group of customs managers working in the major northern ports RAPEX Rapid alert system for non-food products RASFF Rapid alert system for food and feed REACH Regulation on protection of human health and the environment from the risks that can be posed by chemicals REACH-EN-FORCE Enforcement project of the European Chemicals Agency RIF Risk information form RIMSCO Risk Management Strategy Implementation Coordination Group RTG Rubber-tyred gantry crane SAD Single administrative document Silver Axe Joint operation to combat illegal and counterfeit pesticides SIS Schengen Information System SOCTA Serious Organised Crime Threat Assessment SPOC Single Point Network Contact SRSP Structural reform support programme SSTL Safe and Secure Trade Lanes SW Single Window SWOT Strengths, Weaknesses, Opportunities, and Threats TCG Trade Contact Group for Customs Thunderball Joint operation to combat wildlife crime TRIP Travel information point TS Technical specifications TS Temporary storage UCC Union Customs Code VAT Value added tax VIN Vehicle identification number WCO World Customs Organisation



1.Introduction 2.The Strategy and Action Plan for customs risk management On 21 August 2014, the European Commission adopted a Communication on the EU Strategy and Action Plan for customs risk management titled ‘Tackling risks, strengthening supply chain security and facilitating trade’. The strategy comprises seven key objectives, underpinned by the overall aim of reaching a high quality, multi-layered approach to risk management, which is both effective and efficient. The seven key objectives are: 1.Improving data quality and filing arrangements 2.Ensuring availability of supply chain data and sharing of risk-relevant information among customs authorities 3.Implementing control and risk mitigation measures where required 4.Strengthening capacities 5.Promoting interagency cooperation and information sharing between customs and other authorities at Member State and EU level 6.Enhancing cooperation with trade 7.Tapping the potential of international customs cooperation The strategy outlines appropriate risk mitigation and control measures to be used at the most opportune time and place in the supply chain. It takes account of the variable nature and broad range of risks to be addressed, and the primary responsibility of customs authorities in supervising the EU’s international trade in goods. The strategy also takes into account the role of other competent authorities involved in supply chain movements, and emphasises the need for complementarity. It also refers to the international context of risks and the importance of international cooperation in risk management.

It further takes into consideration: ·the importance for the EU of facilitating and accelerating trade; ·the central role of economic operators; and ·the necessity to avoid undue disruption of logistics and supply chain processes. 3. The previous progress reports The Commission presented its first progress report on the implementation of the EU Strategy and Action Plan for customs risk management to the Council and the European Parliament in July 2016. The report aimed to give an overall qualitative assessment of the strategy’s implementation, highlight the progress made under each of the seven key objectives and draw some preliminary conclusions. The second progress report was presented to the Council and the European Parliament in July 2018. Similar to the first report, it provided an overall qualitative assessment of the strategy’s implementation, by outlining the progress made under each of the seven key objectives since the publication of the first report. Rather than attempting to assess the strategy’s impact, these two progress reports were based on a qualitative survey, which gathered input from Commission departments and Member States’ authorities on the implementation of the individual actions measures under the strategy in order to identify both successes and challenges. 4. Third progress report (2018-2020): A response to the Council’s invitation On 8 January 2019, the Council adopted its conclusions on the Commission’s second progress report. It welcomed the progress made on implementing the strategy, including the strengthened collaboration between all actors involved. The Council also praised the launch of new initiatives, in particular the Commission’s decision on Financial Risk Criteria and the participation of customs administrations in security-related activities. It underlined the need to continue to implement the strategy efficiently and in line with the work plan for electronic systems as mentioned in Article 280 of the Union Customs Code (UCC) and as foreseen for the implementation of the UCC. The Council also noted that the customs-trade partnership as well as cooperation with international partners needs to be further explored and strengthened in order to: (i) promote competitiveness; (ii) ensure supply chain security; (iii) facilitate the legitimate movement of goods; and (iv) carry out effective and efficient customs controls. It underlined that risk management is an ongoing process, which is not limited to specific actions with a well-defined beginning and end dates, and that customs authorities must therefore continue to innovate and be prepared to respond to new and emerging threats. The Commission was invited to present its third progress report on the implementation of the strategy within 2 years, and to develop - in close cooperation with the Member States - an efficient reporting mechanism to measure the impact of outcomes and results of specific actions deriving from the strategy. The new monitoring system has not been applied to the current 2014-2020 strategy and action plan given that they will be ending shortly. Instead, this report contains a well-developed draft monitoring system that will be recalibrated in line with the objectives and actions of the future strategy to be proposed by the Commission. Responding to the Council’s request, the Commission has adopted this third progress report on the implementation of the EU Strategy and the Action Plan for customs risk management (‘the report’) accompanied by this Staff Working Document. The present Commission Staff Working Document provides detailed information on the actions’ implementation, objective by objective. In Part 3, the Commission shares some reflections on the next strategy. For example, it plans to reshape and strengthen the current risk management framework in order to achieve a more responsive and structured approach to risk management. In Part 4 the Commission presents ideas and suggestions for establishing a monitoring system. This system, which will be tailored to the next strategy and developed in close cooperation with the Member States, will enable the Commission to better evaluate its implementation. 5. The process of drafting the third progress report To prepare this third progress report the Commission gathered information from various sources, including:

·open source information; ·in-house expertise; and ·a survey of all Member States asking about their progress on several actions under objectives 4, 5 and 6. In this report, the achievements are presented according to the seven objectives of the strategy rather than, as in the two previous reports, by sub actions. This is because the activities of national administrations cannot easily be disentangled and classified under individual actions and sub-actions as defined in the Strategy. Many activities actually simultaneously cover several actions and/or sub-actions. In addition, as noted by the Council, risk management is a process that is not limited to actions with clearly identified beginning and end dates. Consequently, a number of the strategy’s actions and sub-actions are continuous or permanent in nature and therefore considered as being permanently ‘in progress’ or ‘ongoing’.

6.The Progress Report by objective 7.Objective 1: Improve data quality and filing arrangements for effective risk management As mentioned in the previous progress reports, the strategy and the action plan call for a legal framework to be set up to ensure the availability of high-quality supply chain data. For goods entering the EU, this concerns for instance data on advance cargo information relating to supply chain movements. Such data not only needs to be available but also have to be used adequately by customs and other competent authorities for the purpose of customs risk management. 7.1.1.The legal framework The legal framework consists of the Union Customs Code (UCC) and the detailed rules contained in the delegated and implementing acts. The Code’s substantive provisions entered into force on 1 May 2016. While the Commission has not identified any major problem in the application of the Code regarding the quality of data for the ENS, other issues relating to data quality might need to be addressed in the future. It is clear that the benefits and the impact of the Code will only be fully materialised when all the related IT systems will be available. 7.1.2.The Union Customs Code evaluation By the end of 2021, The Commission will carry out an evaluation to establish whether the Union Customs Code and the electronic systems completed by that date are still fit for purpose to reach the objective to ensure modernised, streamlined and simplified processes for the assistance of compliant traders and customs authorities without hampering customs capacities to identify and tackle risks. This evaluation will support future decisions on whether the Code and its implementing and delegated acts should be revised. It will in particular consider whether the Code is sufficiently flexible to deal with the management of customs formalities during crises such as the current Covid-19 pandemic and with new business models such as e-commerce. 7.1.3.The development and implementation of appropriate IT solutions The implementation of the UCC largely relies on a series of 17 electronic systems. Fourteen of those are trans-European systems to be developed or upgraded by the Commission (although with national components), while the remaining three are national systems to be developed or upgraded by the Member States individually. Overview completed and ongoing projects

Completed projects Ongoing projects UCC Registered Exporter System (REX) UCC Notification of Arrival (NA), Presentation Notification (PN) and Temporary Storage (TS) UCC Customs Decisions System (CDS) UCC National Import Systems upgrade UCC Direct Trader Access to the European Information System (UUM&DS) UCC Special Procedures UCC Economic Operator Registration and Identification System Upgrade (EORI2) UCC Guarantee Management (GUM) UCC Surveillance 3 (SURV3) UCC Import Control System 2 (ICS2) UCC Binding Tariff Information (BTI) UCC Proof Of Union Status (POUS) UCC Authorised Economic Operators upgrade (AEO) UCC Centralised Clearance for Import (CCI) UCC Information Sheets for Special Procedures INFORMATION SHEETS (INF) UCC New Computerised Transit System upgrade (NCTS) UCC Automated Export System (AES) While tangible progress is being made in this area with, eight systems already deployed and operational, nine systems are still in development, in line with the planning defined in the UCC Work Programme. This timing is due to technical difficulties and financial costs for Member States, in particular because the systems are highly complex and interconnected but also because there must be a smooth transition from existing systems to upgraded ones, so that the impact on trade is minimised and that controls are not disrupted. As the Commission has suggested in 2018, the costs of separate and uncoordinated IT activities by the Member States would have been very likely significantly higher than under the current collaboration. The Commission is working to ensure the completion of all the Union Custom Code electronic systems by 2025 and it publishes annual reports on progress achieved in this regard. 7.1.4.UCC Import Control System upgrade – ICS2 For goods entering the EU, one such IT system is the EU advance cargo information (the introduction of the Import Control System 2 ‘ICS2’ IT system) whose reform and development are ongoing. The UCC has introduced new requirements in connection to the lodgement and treatment of pre-arrival declarations. The aim is to strengthen the safety and security of the supply chain (all modes of transport), EU citizens and internal market. This is done by improving advance cargo data quality (in the form of entry summary declarations), data filing by different supply chain actors (i.e. implementing multiple filing requirements), real-time data availability across the multiple Member States and real-time collaboration on risk analysis and sharing related risk and control information. This requires a complete overhaul of the EU advance cargo information system and regime, leading to a completely new IT architecture and the phasing out of existing ICS in different phases, as the new ICS2 comes into operation in three releases. The current Import Control System (ICS) became operational in all Member States in 2011, enabling the customs office of the Member State of first entry to receive the entry summary declaration (ENS) and use it to perform the necessary safety and security-related risk analysis. The development of ICS2 is ongoing and will be delivered in three phases or releases, as shown in the summary table below. Release Coverage (Planned) completion Technical specifications Conformance testing Deployment Release 1 Obligation on the relevant EOs (postal operators and express carriers in air transport) to provide the minimum data (i.e. ENS pre-loading dataset) 06/2018 06/2020 03/2021 Release 2 Implementation of complete new ENS obligations and related business and risk management processes for all the goods in air traffic 06/2018 07/2022 03/2023 – 10/2023 Release 3 Implementation of the complete new ENS obligations and related business and risk management processes for all goods in maritime and inland waterways, road and rail traffic (incl. goods in postal consignments) 06/2018 07/2023 03/2024 – 10/2024 8.Objective 2: Ensure availability of supply chain data, sharing of risk-relevant information and control results among customs authorities to analyse and mitigate risks, and ensure equivalent treatment of economic operators. Improving data filing arrangements and ensuring the availability and sharing of supply chain data and risk-relevant information between customs authorities depends on the existence of a legal base and the development and availability of the necessary IT systems. 8.1.1.Modification to the legal base As far as the ICS2 system is concerned, the Commission and Member States have progressed with the necessary modifications to the legal rules of the Union Customs Code package. The legal provisions have been adopted by the Commission in 2020. 8.1.2.Development and implementation of appropriate IT solutions These developments are described above under Objective 1. 8.1.3.Proposed solutions for traceability of goods’ movement during various customs control stages ·The Surveillance 3 System (SURV3) An important database is the Surveillance 3 System. The Surveillance database records and centralises on a daily basis all EU trade data (imports and exports) provided by national customs authorities. It currently contains 2.6 billion records at transaction level and continues to be updated on a daily basis. The SURV3 system introduced an upgrade to the standard exchange of information in the earlier (SURV2) system to align the system with UCC requirements. The upgrade implemented electronic data-processing techniques and established adequate functionalities needed for processing and analysing the full surveillance dataset obtained from Member States. The project has been implemented in three phases. Phase 1 has been in production since 2 October 2017. The elaboration activities of phase 2 (the current surveillance and customs control circuit (CDC) functionality) and Phase 3 (new reports) started in January 2018, covered by a unique software release. The system was successfully deployed on 1 October 2018 and the data analytics capabilities have been accessible to users since March 2020, allowing the Commission to use IT tools to exploit surveillance data. Currently, automated data analysis tools are under development that allow users to monitor and analyse both transactions and trade flows. The full use and benefits of the system will be manifest when all Member States will submit the legally defined expanded dataset from their upgraded national systems. ·The common information sharing environment (CISE)

In the maritime domain, the development of a common information sharing environment (CISE) is promoting the exchange of relevant information among the different authorities involved (over 300 authorities at Member States and EU levels performing coast guard functions). CISE is currently in a transition phase to operations, managed by the European Maritime Safety Agency (EMSA) in close cooperation with the Member States, several other EU agencies (EFCA, Frontex, European Union Satellite Centre - SatCen, European Defence Agency – EDA) and the European External Action Service (EEAS). The Commission has mandated EMSA to coordinate the CISE transitional phase for the operational and technical aspects. CISE is a voluntary collaborative process across authorities and borders to enhance and promote awareness over the European maritime domain. The CISE interconnects existing surveillance systems and networks and provides all concerned authorities with an access to the information needed for their missions at sea. Thanks to CISE, different systems interoperate to easily exchange data and other relevant surveillance information through the use of modern technologies. Following the revision of the mandates of the European Border and Coast Guard Agency, the European Fisheries Control Agency and the European Maritime Safety Agency (EMSA), a tripartite working arrangement was signed. The agreement sets out a framework for enhanced coordination between the agencies, enabling effective and cost-efficient support to more than 300 Member States civilian and military authorities responsible for carrying out coastguard functions in areas including maritime safety, security, search and rescue, border control, fisheries control, customs control, general law enforcement and environmental protection. The CISE will directly support the cooperation on coast guard functions by improving maritime surveillance and mitigate the diverse risks that might have a negative effect the security of our seas and shores, such as pollution, illegal and criminal activities (including illegal migration), piracy and terrorism. ·The Digital Transport and Logistics Forum (DTLF) The Digital Transport and Logistics Forum (DTLF) is a group of experts led by the Commission that brings together stakeholders from different transport and logistics communities, from both the private and the public sector. It aims at building a common vision and roadmap for digital transport and logistics. The DTLF also contributes to identifying needs for measures at EU level and supporting their development and implementation where relevant. During its first mandate (2015–2018), the DTLF has been effective in developing measures to stimulate the interoperability in the digital information exchange in transport and logistics, and enabling collaboration across sectors, borders and modes of transport. In the transport sector, vast amount of data is available that could support new business opportunities, as well as improve the use of existing resources and the daily life of citizens. There are numerous potential advantages in better exploiting available data and the use of information and communication technologies (ICT) in transport and logistics. Among such benefits, there is improved security. Through more and better data on the goods, on vehicles and on security controls already applied to cargo, risk assessments by authorities could further improve. This could increase the efficiency of controls and the overall security, and reduce the burden on transport service providers. In April 2020, the Council adopted new rules, which will make it easier for freight transport companies to provide information to authorities in digital form. Increased digitalisation of freight transport and logistics will bring significant cost savings for businesses, and make the transport sector more efficient and sustainable. The new rules will create a uniform legal framework for the use of electronic freight transport information for all modes of transport. All relevant public authorities will be required to accept information provided electronically on certified platforms whenever companies choose to use such a format to provide information as proof of compliance with legislative requirements. However, companies will still be able to present the information in paper format if they prefer. ·The eManifest pilot project The objective of the eManifest pilot project was to test procedures that would simplify the submission of information required by different authorities for cargo formalities. It aims at facilitating and reducing the administrative burden for ship data providers. Through this pilot project, a harmonised eManifest, which encompasses data required in a number of cargo-related formalities required by maritime and customs authorities, was developed and tested. The project also aimed at assessing whether the exchange of the eManifest data via SafeSeaNet could minimise reporting obligations for ships trading between EU ports and how ship and cargo tracking could be carried out. The pilot project ended in 2018. A final report was issued together with other deliverables such as data mapping, system requirement specifications and business rules, etc. These deliverables have been re-used in 2019 as a basis for the Regulation establishing the European Maritime Single Window environment. A persisting challenge is the lack of common implementation of legislation in maritime and customs. However, cooperation between maritime and customs authorities has gradually increased during the pilot project. ·The Trade Control and Expert System (TRACES) TRACES is the European Commission’s multilingual online management tool for all sanitary requirements on intra-EU trade and importation of animals, semen and embryo of animals, food, feed and plants. Its main objective is to digitalise the entire certification process and linked procedures. It is in this respect in line with the Digital Agenda for Europe. TRACES facilitates the exchange of data, information and documents between all involved trading parties and control authorities and therefore simplifies and speeds up the administrative procedures. The possibility to trace back all the movements of animals, animal products, food and feed of non-animal origin and plants contributes to the reduction of the impact of disease outbreaks and allows for a quick response to counter certain serious risks along the agri-food chain. TRACES has more than 42 000 users from about 85 countries worldwide, is accessible 24 hours a day, 7 days a week, free of charge and in 34 languages. A new project initiated by the Commission is the development of an IT system for electronic submission and management of catch certificates under Regulation (EC) 1005/2008 on establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated fishing. The project will assist Member States’ authorities in carrying out their verification and risk management tasks in relation to imports of fishery products into EU. The system currently runs two platforms: TRACES Classic and TRACES New Technology (TRACES NT), pending full migration from Traces Classic to Traces NT in 2021. TRACES is interfaced with Member States national customs system through the EU Customs Single Window Certificates Exchange platform (EU CSW-CERTEX) to enable automated verification at customs clearance of documents stored in TRACES. EU CSW-CERTEX is a key module part of the EU Single Window Environment for Customs initiative. ·AFIS - CSM

A database of maritime container’s movements has been established (AFIS-CSM), built from messages of the type ‘Container Status Messages (CSMs)’, reported by sea carriers, as required by Regulation 515/97, amended by Regulation 2015/1525. The information is collected and processed based on Regulation (EC) 515/97 and is restricted to the authorised parties defined by the Regulation. The cooperation with the large majority of sea carriers, as well as with the major industry representative (WSC), has been good. The Commission has brought technical support to sea carriers in order to help them in fulfilling their CSM reporting obligations. 9.Objective 3: Implement the concept of ‘Assess in advance — control where required’ to respond adequately to identified EU and national risks while maximising efficiency in the use of resources and fluidity of the supply chain This objective lies at the heart of the strategy, in the sense that all the other objectives should ultimately contribute to enabling customs to target their controls better in terms of when and where they take place. 9.1.1.Methodologies to implement the concept of ‘Assess in advance – control where required’ A first methodology is the credibility checks. Credibility checks were first introduced via TARIC in the Member States national systems in 2013 and are being continuously developed and expanded. They are automated checks introduced at the clearance stage of imports. These are measures that check the compatibility of entries in the customs declaration against specific parameters and, in case of noncompliance, either block them or flag them by creating a warning for Customs authorities. A second methodology is the Systems-Based Approach (SBA). The Systems-Based Approach is a control methodology directed at trustworthy economic operators, with the focus on whether the operator’s internal control systems enable it to control its business and mitigate risks related to customs compliance. The work of the SBA Network and the respective project group was completed with submission of the SBA final report to the Customs Policy Group (CPG) in December 2017. 9.1.2.Priority Control Area (PCA) The Priority Control Area (PCA) instrument is the key mechanism in the Customs Risk Management Framework (CRMF) (see objective 4). It enables the EU to designate specific areas to be treated as a priority for customs controls. The identified areas are hence subject to reinforced customs controls carried out in a coordinated manner and based on common risk assessment criteria and real-time exchange of risk information. The PCA tool has been used to coordinate EU customs actions in most major risk areas already since 2007, delivering operational results and strategic lessons. While during the period 2018-2020, no PCA has been carried out, intensive cooperation took place on COVID-19 in 2020 (see below). In crisis times, PCAs are replaced by crisis management activities. 9.1.3.Safety The Commission has drawn up factsheets setting out guidelines for the cooperation of customs and sanitary authorities for controls on goods regulated by EU law. For product safety, checklists for a selection of product categories have been drafted together with national customs and market surveillance authorities. These checklists are intended to guide customs officers when they have to carry out product safety controls on goods. The Commission has in addition set up an expert group gathering experts from the Member States’ customs authorities (the PARCS Expert Group) to address issues related to protection of health, cultural heritage, the environment and nature. The PARCS meetings are a key activity in cooperation and control of activities on the protection of health, cultural heritage, the environment and product safety. It contributes to the exchange of experience, knowledge and best practices on coordination between customs administrations and between customs administrations and competent national authorities responsible for the different policy areas at stake. It also contributes to developing risk criteria for customs controls to be carried out in these areas. 9.1.4.Financial Risks In May 2018, the Commission has adopted a Commission implementing decision laying down measures for the uniform application of customs controls by establishing common financial risk criteria and standards (FRC). The decision is not available to the public and is only available for customs risk management experts in the Member States. The FRC are a set of rules that allow the Member States customs clearance systems to systematically identify (or ‘flag electronically’) transactions that present a potential financial risks and that require further scrutiny and/or control actions. The FRC encompass the majority of known financial risks and contribute to a more consistent approach to customs controls. The decision enables Member States to address financial risks in an equivalent manner at the external border, without placing an undue burden on legitimate trade. It also identifies the most opportune time and place of the control depending on the scope and nature of the risk and on the availability of data and documentation. The decision sets out the common risk criteria that have to be used to address specific types of financial risks, among which economic operators at risk, goods at risk, undervaluation, and evasion of anti-dumping duties. FRC are used in the everyday electronic risk management process to harmonise the selection process for customs controls. In line with the UCC, the FRC take into account the proportionality of the risk, the urgency of the application of the controls and the probable impact on the trade flow. A project group on Financial Risk Criteria, financed under the Customs 2020 programme, has worked on the drafting of a guidance on the implementation of the FRC, which was endorsed on 5 December 2019 by the Customs Expert Group, Customs Control and Risk Management Section (CEG CRM). The document describes the main principles under which the FRC operate and how they are to be integrated into the risk management and control processes. It aims at ensuring a common interpretation of the FRC across the EU by providing guidance and specifying elements needed for a harmonised implementation of the measures set up by the FRC Implementing Decision, building up on Member States good practices and knowledge in addressing financial risks. The group now focuses on the implementation of the FRC Implementing Decision and on its regular monitoring to ensure that risk management can respond promptly to the constantly evolving financial risks. It aims at addressing specific or new concerns (e.g. e-commerce) and filling potential gaps in the identification of financial risks. 9.1.5.Intellectual Property Rights (IPR): In 2019, the Customs 2020 Working Group ‘Development of strategies on the framework of the ‘Belt and Road Initiative’ (BRI) (goods by train)’ was created aiming to examine the new challenges related to the impact of the BRI by which more traffic of goods (including IPR infringing ones) by rail from China is expected. The Commission and five Member States have participated in this working group. The working group has made a thorough assessment of the trade flow at stake and the problems specifically linked to rail cargo. The general conclusions are that rail cargo is not substantially different from other cargo modes, the clearance procedure is comparable, as is the information available at the time of clearance. Therefore, the working group has considered that further risk assessment on rail cargo could be integrated in the project group on risk management in IPR.

This latter project group will analyse the existing instruments used in the context of the Common Risk Management Framework (CRMF) and other sources of information and databases that are currently available. Its objective focuses on how to enhance the effectiveness and efficiency of the risk management as to come to a better targeting of conspicuous consignments of IPR infringing goods in the different modes of transport and to achieve more successful control results. The project group started its activities in the second half of 2020. 9.1.6.Product safety and compliance A major development took place in the area of product safety and compliance, where the European Parliament and the Council adopted the new Regulation 2019/1020 on market surveillance and compliance of products with EU legislation. This new legislation, which will replace the existing provisions of Regulation (EC) No 765/2008, strengthens the legal framework for controls on products entering the Union. It will significantly strengthen cooperation between customs and market surveillance authorities in view of more effective checks on imported products (other than foodstuffs and medicines). The Regulation aligns with the principles of the Union Customs Code and provides for better risk information sharing through: -Structural exchange of information and data between customs and market surveillance authorities, facilitated by both the use of the Customs Risk Management System (CRMS) for customs common risk management and controls and the creation of a new digital interface between national customs systems and the EU database for the exchange of market surveillance information (ICSMS) for the smooth treatment of customs declarations in the scope of the product safety and compliance framework; -Comprehensive national market surveillance strategies covering import and digital supply chains; -The establishment of an EU Product Compliance Network, which will support cooperation with border control authorities; -Provisions for the adoption of techniques and benchmarks for product compliance checks at the Union borders on the basis of common risk analysis on the EU level; and -Regular collection of statistical data on product compliance interventions at the Union borders. The new regulation on market surveillance will be fully applicable as from 16 July 2021. The Commission and the Member States have initiated preparations for its implementation and established several project groups to lay the groundwork for its timely entry into application. In parallel, the cooperation between market surveillance and customs authorities has been stepped up at EU level. 10.Objective 4: Strengthen capacities to secure equivalence in effective implementation of the common risk management framework and to increase responsiveness to newly identified risks The Common Risk Management Framework (CRMF) is the EU policy and legal vehicle for establishing an equivalent level of customs controls throughout the EU. It has been created to support a common approach so that priorities are set effectively and resources are allocated efficiently with the aim of maintaining a proper balance between customs controls and the facilitation of legitimate trade. 10.1.1.The Common Risk criteria (CRC) 10.1.1.1.Financial Risk Criteria The elements are described above in Section 2.3.4 10.1.1.2.The evaluation of the existing Common Risk Criteria (CRC) on Safety and Security With a view to identifying what could be possible shortcomings of the current CRC and how to improve their implementation, a Customs 2020 project group (Security Risk Rules project group) has been set up. Twelve Members States are represented in this group. It has prepared a draft detailed report per entry CRC on: • Problems that hinder implementation of the CRC • Problems arising from the implementation of the CRC • Statistics on its efficiency • Suggestions on whether to keep the CRC as it is, amend it or deactivate it.

As part of the evaluation, the Commission has prepared a detailed analysis on the number of automated hits and final assessment per CRC (with breakdown per

High Interest Country (HIC) when relevant) and on the number of controls and positive results per CRC. This is done per Member State and at EU level using data from the quarterly statistics already sent by the Member States for the year 2018. In addition, an analysis on the individual hits and the hits in combination has been performed. Apart from the evaluation of the current CRC, the group is exploring the possibility of developing new CRC to address new risks that have arisen, provided they do not require an investment from Member States, in view of the development of ICS2, which will replace ICS for entry operations. 10.1.2.The Customs Risk Management System (CRMS) The CRMS is a common database where forms and messages are stored and that Member States can consult in order to identify which information needs to be introduced in the national risk analysis system or communicate with each other. The CRMS is used: -By all the Member States, the UK (until the end of the transition period) as well as Switzerland and Norway (through the security agreement). By the Commission to provide Member States with risk information on any type of risks. -For the daily exchange of information (via RIF, Risk Information Form). In such case, only new trends are mentioned. The CRMS is indeed not a database of seizures and aims only at informing on seizures with new interesting elements (new targeting element). -When a Priority control area is organised or implemented. -When a crisis arises (CRMS is used as the customs crisis management system). A current example is the use of CRMS for the COVID-19 customs-related information (see below). -To share sensitive documents. Since 2005, CRMS has been regularly updated to include new functionalities or more user-friendly elements. In particular, a COVID-19 crisis alert was opened on 4 February 2020 in CRMS/crisis management to allow MS sharing and receiving information and guidance on the prioritising of risks for customs controls during the crisis. Moreover, to date, more than 400 RIFs have been issued concerning dangerous and non-compliant COVID-related medical products, medical devices and personal protective equipment. A complete reshape of the system (‘CRMS2’) has also been decided. This reshape is detailed in two key documents: -The CRMS business case endorsed at the end of 2016. It provides for the main business needs based on the experience of 2 years of work carried out with the Member States. The business case was adopted by the Member States in the CEG CRM and submitted for info in the ECG group (IT). -The vision document endorsed in April 2018. It comprises the main IT aspects for the first release of CRMS2 and already foresees several additional releases. The elaboration phase of CRMS 2 has now been completed and the construction phase of CRMS2 started. This will be followed by a transition phase, which will include various testing. The new CRMS2 is planned to go live in Q4 2021 10.1.3.Actions taken by the Member States under Objective 4 10.1.3.1.Methodology used to collect information from Member States On 30 January 2020, all Member States received a questionnaire asking them to report about the actions taken to improve the implementation of the CRMF in their respective country, as well as the achievements made by these actions so far. Twenty-six Member States have responded to the questionnaire. Member States were invited to consider in particular the following action areas mentioned in the strategy:

·Development of possible further capacities and enhancing of cooperation and coordination between customs authorities. ·Development of further national and EU level customs threat and risk assessments for the full range of threats and risks. Member States were asked to rate the priority their customs administrations have given to improving the implementation of the CRMF in their countries since 2018 and to identify the activities and outputs / actions aimed at improving the implementation of the CRMF in the areas of analysis, developing capacities, and cooperation / coordination. Respondents were also asked to rate the extent to which the actions have strengthened capacities in relation to the implementation of the CRMF (led to results), and improved implementation of the CRMF and enhanced customs risk management (outcomes). Finally, Member States were asked whether they have encountered any significant challenges, difficulties or barriers that have kept them from implementing desired action or making more progress in the implementation of the CRMF. 10.1.3.2.Customs administrations’ level of priority of improving CRMF’s implementation No activity Low priority Medium priority High priority No reply - - 10 16 - All twenty-six (26) Member States that responded to the questionnaire indicated that objective 4 – improving the implementation of the CRMF – is a priority within their customs administrations and a high priority for sixteen (16) of these. The table below further indicates that all twenty-six (26) Member States are taking some action to improve the implementation of the CRMF. 10.1.3.3.Status of actions aimed at improving the implementation of the CRMF Action No action planned Action planned but not yet started Action ongoing / completed No reply Analysis - 2 22 2 Developing capacities - 1 24 1 Cooperation / coordination - - 25 1 10.1.3.4.Analysis ‘Analysis’ is defined broadly, so that we consider it to include not only formal studies or evaluations but also more informal work, e.g. stock-taking, feasibility studies, problem mapping, gap/needs analysis, and evaluations related to effective and efficient implementation of the CRMF. The vast majority of Member States (22) have either completed or are in the process of carrying out analysis in this area, while nearly all the remaining Member States have some planned. In many cases, several initiatives are running in parallel, some having been completed and others being currently carried out. The analysis carried out differed substantially between Member States, but generally fell into four categories, namely relating to: 1.IT and data resources; 2.Internal systems; 3.Strategies and plans; and 4.Common risk criteria and the exchange of risk information. ·IT and data resources

Half of the responding Member States (13) reported planned, ongoing or completed work to analyse and develop their IT systems. These involve various IT systems and capacities. The most commonly reported is analysis related to the forthcoming implementation of the import control system 2 - ICS2. One Member State reported plans to conduct a preliminary analysis in view of the changes that would be required to apply to their current risk management system in order to render it compliant with ICS2. Within the national plans, one Member State is currently in the process of carrying out various analyses including needs assessment, gap analysis, security analysis, and legal analysis for the implementation of ICS2. One Member State has conducted gaps and needs analysis on a broader scale in relation to the UCC IT changes, mostly concerning ICS2, the import system, and e-commerce. One Member State explained that several national IT systems have to be set up new and this demands the development of advanced risk management modules using new risk management tools such as predictive analytics, automated validation of profiles, and automated real time profiling. One Member State has completed a feasibility study of the current state of the national risk management framework, supported by a SWOT analysis of possible approaches for improvement of risk management for the forthcoming ICS2 and subsequent customs procedures in the supply chain (such as the national Import System, New Computerised Transit System (NCTS), Export Control System (ECS) – Automated Export System (AES)), and Technical Specifications (TS). In another Member State, there are plans of continuation of IT work to ensure the sustainability of the treatment of entry summary declarations (ENS). ·Internal systems Other works reported by Member States to analyse and develop IT systems varied in scope. Examples include a new customs clearance system, including a new risk engine with enhanced features; exploring the use of artificial intelligence (AI) to support risk analysis, e.g. on images, measurements of spectrometers, and signals; a mapping of necessary IT system changes in order to improve anti-smuggling measures and monitoring; needs analysis for the national electronic portal to develop a coherent concept of using rubber-tyred gantry crane (RTG) scanning devices to scan means of transport in order to create a basis for building the capability to respond to irregularities in foreign trade. Another field where Member States have identified development needs for improved risk management is data resources, which is often intertwined with improvements to IT resources. Examples include ongoing analysis on improvements of the national risk management system, which is being complemented with automated analysis tools and connected to external data sources, or improving risk scoring through a new analytical tool for data mining. ·Systems, strategies and plans Analyses and assessments of various systems, strategies and plans have also been relatively common. Examples include actions to ensure the reliability of ENS by increasing the knowledge of ENS, operators’ obligations, and required data and control actions, and involves scoping notes to regional offices, training actions for operational services, a full assessment of the difficulties encountered, and the initiation of a sanctions policy in the event of breaches; thorough evaluation of existing risk profiles; national strategies and action plans to fight crime, fraud and smuggling of tobacco products, dried tobacco, novel products and/or liquid for electronic cigarettes; annual reviews and updates of the risk mitigation plans related to performance indicators of external and internal risks; internal reorganisations of departments related to risk management and control activities; the organisation of workshops dedicated to risk management, or the revision of existing processes and the set up appropriate new processes for performance analysis. ·Common risk criteria and the exchange of risk information Four Member States reported ongoing and completed analysis related to the common risk criteria (CRC) and the exchange of risk information. They in particular have reported on updated internal procedures concerning the Customs Risk Management System (CRMS), analysis related to the implementation of the common financial risk criteria and standards (FRC) as well as the continuous development of new risk criteria and new risk rules to be applied and to become available for data analytics and predictive analysis for customs, tax, and company registry data. ·Other activities Member States also referred to activities in analysing the movement of tobacco products to detect irregularities, non-compliance and VAT fraud. They also referred to their participation in the Horizon 2020 PROFILE and PEN-CP (Pan-European Network of Customs Practitioners) research projects. PROFILE relates to the uptake of data analytics by customs and sharing of results between participating countries. Its focus is mainly on value analysis for e-commerce, and operator profiling for import declarations and ENS. PEN-CP targets building communities of experts in risk management, detection technologies, and laboratory equipment, to better focus innovation efforts and exchange of best practices. In addition, Member States have mentioned the role of the Structural Reform Support Program (SRSP) on e-commerce, for which they are mapping best practices by other customs in the EU and third countries to tackle the specific problems related to e-commerce, including risk analysis, IT systems, and fight against fraud. This includes study visits to other Member States to exchange on expertise and experiences. Some Member States also provided a more general answer for analysis related to effective and efficient implementation of the CRMF. For instance, the informal evaluation of effectiveness and analysis of problems and gaps in relation to the implementation of the CRMF. One Member State’s authorities underlined that their primary focus in the risk management area is the improvement of performance and outcome rather than direct actions to support individual aspects of the CRMF. 10.1.3.5.Developing capacities ‘Developing capacities’ is here defined as any action taken to support capacities related to the effective and efficient implementation of the CRMF, including implementing IT solutions, supporting risk management of the supply chain, and efforts to better integrate the CRC and/or Priority Control Areas (PCAs) into the national risk management system. There are a considerable number of planned, ongoing and completed actions to support capacities related to the effective and efficient implementation of the CRMF. Actions reported mainly related to developing new or improving existing national risk management IT systems including efforts to better integrate the CRC and FRC as well as linking national systems to the CRMS for sharing of Risk Information Forms (RIFs). Several customs authorities also reported preparations for implementation of the ICS2 system. ·Improving national risk management systems / engines Fourteen MS specifically reported improved or continuously developed national risk management systems. For instance, a new customs clearance system is being implemented in one Member State and will include a new risk engine with enhanced features. This will allow efficient risk management in different domains. The main areas of interest are import (including import declarations for low-value consignments), ICS2, export, NCTS, temporary storage, and goods accounting. In order to strengthen the risk analysis and control process, new working methods with adopted IT-functions have been conceived and are going to be implemented in the future system.

Another Member State is currently in the final stages of the development of a new national import system for customs, scheduled to go live in November 2020. This will incorporate a new electronic risk management system, which will provide better-quality risk profiling and reporting functions. One Member State reported on the implementation of new features to their risk engine. The new features include operator profiling and behaviour analysis and a large number of statistical enrichments. Additional work is ongoing to enable the system to incorporate all types of declarations and messages including NCTS, e-commerce declarations, arrival notifications (AN), presentation notifications (PN), and temporary storage (TS). Actions are also ongoing to implement IT solutions in the national systems for safety and security analysis, e.g. for increasing the capacity of analytical tools to process more data as well as improving quality of data and reporting. To better identify offenders and improving the quality of data for risk analysis, interconnections between databases are carried out. One example is the implementation of postal parcels analysis in the national risk profiling system as well as making improvements to the national risk profiling system and other IT systems to strengthen anti-smuggling measures. Another example is the enhancing of risk management systems to enable users to connect and search a variety of data sources to which they have authorised access and bring those results directly into intelligence analysis. Implementing such analysis through advanced tools would help customs authorities to uncover hidden connections and thus gain actionable intelligence to combat illicit trade and mitigate risk. As a result, this will support risk management and reinforce efforts to better integrate risk criteria. Actions also take place in some Member States to connect all supply chain data and enable automatic and instant consideration of the results of risk analysis and controls. One Member State has reported on several actions related to the CRMF, with an interface between the risk assessment and control system and the Schengen and Interpol databases for automated comparisons of vehicle plate numbers and vehicle identification numbers (VINs), indicated in import, export and transit declarations and to cover ICS2 related national functionalities. Further, the interface between this system and X-ray control systems used by the customs authorities was implemented, enabling the linking of risk management results with X-ray control results. The system is further being improved to enable automated risk assessment of persons’ declarations, the function to use customs clearance data in mobile devices and the function to link to external data sources. In the same vein, one Member State is supporting RTG operators by developing a system for automatically identifying threats in X-ray images in controlled means of transport. The aim is to develop an internet application based on AI. The same Member State is implementing a modern IT tool for handling applications from the National Revenue Administration for international administrative assistance in customs matters. Several (thirteen) Member States further reported ongoing or planned efforts to better integrate the CRC and FRC into their national IT systems. ·Preparations for ICS2 As part of ICS2, each Member State will have to develop and implement a national interface with the ICS2 common repository - National entry system (NES) supporting necessary risk analysis processes, process of arrival, presentation and exchanges of risk analysis and control results with the common repository. Many (11) Member States reported that they were preparing for the new ICS2 system and development of the NES. For instance, alongside ongoing work on the EU level as regards to the legal basis of ICS2 information exchange, one authority is preparing the incorporation of the business-wise and technical specifications related to ICS2 into the national domain and building a risk engine with flexible CRC implementation to cover the entire range of security risk analysis (pre-loading and pre-arrival) as well as the different responsibilities in the process (first point of entry and subsequent point of entry). In another Member State, they are providing advisory support for the development of the necessary systems in view of the implementation of ICS2 through meetings with representatives from postal services and the couriers. Other Member States referred to participating in meetings of the Customs Eastern and South-Eastern Land Border Expert Team (CELBET) Analytics Subgroup, which is responsible for development and implementation of analytic tools (CAToolbox) to support ICS2. ·Measures to tackle undervaluation fraud Five Member States reported specific measures to mitigate fraud related to under-reporting the customs value of imported goods. For example, one Member State reported the analysis of profiles and control results on undervaluation of certain products. Another Member State reported they have modified and extended their system in the field of import of textiles from specific countries. ·Other measures In relation to the logistics chain, one Member State’s customs are doing ENS risk management improvements to routines in different areas to optimise risk management, areas including restrictions, suspensions, incorrect ENS, and duplicated ENS due to modifications. Various technical developments have been made to ensure the traceability of the results of risk management and control proposed in ENS to the customs pre-declarations. Techniques are being explored in the use of data mining to select and combine customs and tax information from the system to facilitate risk management of both ENS and customs declarations. One Member State has further developed several analyses and technical developments to implement the reduction of controls for EU Authorised Economic Operators (AEOs), including Economic Operators Registration and Identification number (EORI) and customs decisions, and the third country AEOs with which there is a mutual recognition agreement. Another Member State reported that it will develop the interface of core declaration systems including the national import system, the Automated Export System (AES) and the NCTS including a risk analysis module in order to fulfil the obligations arising from the legal requirements of the Union Customs Code (UCC) and Multi-Annual Strategic Plan (MASP). Already completed actions include training for risk analysis officers and a workshop on risk analysis for risk and control experts from all regional customs offices. Another Member State is finalising a programme to restructure and rearrange the workflow of customs national risk analysis procedures. They also reported ongoing preparatory work to embrace the revocation of the 22-euro threshold referring to the submission of customs declarations through adapting existing procedures to the upcoming situation, both tackling the increasing number of declarations and the related business risks. One Member State reported that it is recruiting data analysts to improve its risk analysis capacity. In relation to supporting risk management of the supply chain, the customs authorities of the Member State have participated in tools together with commercial partners. They have developed a dashboard that shows additional data from external sources and is used in the risk assessment of manual declarations. External sources are companies that want to make data available for inspection by the supervisory authorities or public sources. Their customs also participated in a project, in which one of the working packages focused on a port and included: integrating logistics and security requirements in the supply chain design and planning phase; demonstrating the benefits of coordinated border management and taking advantage of commercial controls; improving supply chain visibility for supervision in trade lanes with multiple border crossings and intentional vagueness to conceal criminal activities. In addition, this Member State will be strengthening the intelligence function in the passenger traffic by getting access to travel information via a government-wide single window to which airlines supply data once. This provides more opportunities for analysis and contributes to the development of a single window. One Member State reported ongoing work related to customs technical equipment. One project involving centralised scanning (centralised X-ray scanner image analysis and interpretation during customs control process). Another project involves video surveillance system installation at customs control points. In addition to technical equipment, they are establishing a Single Customs Control Support Centre to ensure implementation of more efficient control measures.

In another Member State, changes in the legislation have been made, allowing the customs administration to become a competent authority in relation to the use of Passenger Name Record (PNR) data. The changes came into force in July 2020. Similarly, in another Member State, they have created a passenger information unit (PIU), where the customs administration has a seconded customs officer deployed working in the area of risk analysis for PNR. 10.1.3.6.Cooperation / coordination ‘Cooperation / coordination’ is defined as action taken to enhance cooperation with customs authorities in other Member States and increase sharing of information or risk analysis results, e.g. through participation in relevant collaboration forums, and bilateral cooperation / coordination with other Member States. Nearly all Member States (25) providing responses reported ongoing or completed actions taken to enhance cooperation with customs authorities in other Member States and to increase sharing of information or risk analysis results. Such actions included exchanging information through specific tools such as the CRMS, participation in relevant collaboration forums, project groups, hosting and taking part in seminars and workshops and other bilateral and multilateral cooperation between Member States. Not all Member States provided exhaustive lists of activities, such as groups they are involved in, though responses suggest that Member States are active in a number of relevant risk forums and that bi- and multilateral cooperation and coordination between Member States is continuous. ·Use of tools for the exchange of customs information Member States specifically stated in their replies that they are using the CRMS for exchange of risk information with other Member States. For instance, one customs authority reported they evaluate and feedback RIFs in CRMS from other Member States on a daily basis as well as create RIFs in order to share relevant risk information with other Member States. Other tools for information sharing were also noted: -OLAF’s Anti-Fraud Information System (AFIS), notably on Customs Procedure 42 and excise data -The Common Communication Network (CCN) for exchange of information on Customs Procedures 42 and 63 -The Surveillance 3 VAT module application for the exchange of customs data for Customs Procedure 42 between customs and tax administrations (following the amendment of Regulation 904/2010) -COPIS, the EU-wide anti-Counterfeit and anti-Piracy Information System, to register counterfeit dossiers -Bayplan/stowage plan occupied and empty locations message (BAPLIE) to verify the accuracy of data declared in ENS in relation to the containers declared in ICS. ·Collaboration forums and project groups Nearly all Member States participate in one or more contact groups established under the Customs programme to increase the practical level of cooperation and coordination between customs administrations at the external frontier of the EU – the European Land Frontier (Land Frontier Contact Group (LFCG)), Ports and Airports contact groups (RALFH, ODYSSUD, ICARUS). The LFCG represents all 16 MS with external land borders, whereas not all EU ports and airports are represented in the respective groups. There are also specific contact groups and subgroups on sniffer dogs, rummage, rail and scanning. The objective of these groups is to promote the operational cooperation and coordination between customs authorisations with regard to efficient customs controls at external borders and to exchange valuable information to make customs controls on movement of various means of transport more efficient. The groups create a network between customs officers working in a specific traffic (air, road, rail, sea) or specific field (scanning, rummage, sniffer dog). The groups function also as a network of contacts, with customs helping each other to answer ad hoc questions. All groups collect data on resources, traffic and threats (through mapping or comparison) which provides information to the strategic management of the national customs administrations to use and decide priorities and allows moving towards a more uniform performance at the external borders. Other customs project and expert groups, such as the scanner contact group of Northern and Southern ports, the Canine Unit Network and the Customs Eastern and South-Eastern Land Border Expert Team (CELBET) use in the scope of their activities some of the raw data. Several Member States further participate in the Customs Eastern and South-Eastern land Border Expert Team CELBET, which is an initiative of eleven (11) Member States including Finland, Estonia, Latvia, Lithuania, Poland, Hungary, Slovakia, Croatia, Romania, Bulgaria and Greece under the Customs 2020 programme. The main objective of this expert team is to strengthen and improve the operational cooperation. Although CELBET is not a legal entity, this expert team coordinates operations, shares information and pools human resources to enhance operational cooperation – contributing to the implementation of common customs legislation and policy. The Data Mining Project Group (DMPG) is a Customs 2020 group with the main purpose to fight against customs fraud and protect the financial interest of the Member States and Commission. The group works by gathering and sharing data. The group works to strengthen cooperation. The project group has three main objectives: (i) Gather the list of risky items for deeper analysis within the group, (ii) Develop new risk profiles by analysing the total dataset and (iii) Apply international practices by sharing standards between members. Other participation in forums mentioned by Member States included:

·INTEL4CUSTAF, an analysis pilot project / expert group run by OLAF and financed by HERCULE III programme with the participation of the majority of Member States, ·MAR-INFO, a group of partners from Northern and Southern regions (with the participation of the majority of Member States from the Mediterranean zone and Northern Europe) cooperating and exchanging information to prevent smuggle of drugs, drugs precursors, high tax goods (cigarettes, tobacco and alcohol) and goods related to terrorism and organised crime in the maritime area. ·Europol’s European Multidisciplinary Platform against Criminal Threats (EMPACT) operational action plans (OAPs). In this context, one Member State reported the posting of a liaison at Europol to enable smooth cooperation and information exchange. ·Seminars and workshops of the Customs 2020 programme Several Member States reported taking part in seminars and workshops organised under the Customs 2020 programme. For example, the authorities of one Member State have hosted visits from several other MS and some third countries to demonstrate their risk engine and datamining capabilities. They are continually receiving requests for these visits and were planning additional. Three Member States had a common workshop in February 2020 tackling the threat from smuggling of cigarettes, counterfeit tobacco packaging and tobacco products by parcel post. One customs authority stated they regularly take part and host meetings and workshops with other MS. On the operational level, the authorities have established active working contacts with other MS risk analysis units and also regularly organise and take part in work meetings and site visits in other MS. Another customs authority reported they attended several OLAF workshops in the area of customs data analysis, and participated in CRMS RIF training. A regular national seminar was organised in another Member State on international administrative assistance in customs matters. The topics of the seminar included legal and practical aspects of preparing requests for administrative assistance and rules for the implementation of requests received from foreign customs administrations. Assessment of the risks for the effective implementation of controls in cases where it is necessary to use international administrative assistance was carried out. ·Bilateral and multilateral cooperation / coordination with other Member States Several authorities noted bilateral and multilateral cooperation and coordination with other Member States. The activities mentioned include a bilateral agreement between two Member States related to risk analysis of ENS data, cooperation between two or more other Member States in the area of undervaluation, operational and financial mutual assistance activities are in several areas including in the field of undervaluation and Regulation 515/1997. Another Member State referred to cooperation centres for Customs, Police and Border Guards on the borders to neighbouring Member States. Activities involve identification and counteracting threats arising from the movement of persons and goods (e.g. fuel, tobacco products, narcotics, alcohol, and other goods subject to restrictions). The centres also exchange information on cross-border crime, customs and tax inspections, fiscal criminal proceedings, and persons, as well as results of RTG inspections and data from automatic number plate recognition systems. Further bilateral and multilateral cooperation included collaboration, exchange of risk information and exchange of best practices between neighbouring countries as well as Naples II Convention, and participation in Joint Customs Operations (JCOs). 10.1.3.7.Results – strengthened capacities Extent to which above actions have strengthened capacities in relation to the implementation of the CRMF Not at all To a limited extent To some extent To a great extent No reply - - 14 11 1 Nearly all Member States (25) indicated that the actions taken to improve the implementation of the CRMF have resulted in strengthened capacities, eleven (11) to a great extent and fourteen (14) to some extent. Several Member States reported improved national risk analysis processes as described below. Actions have clearly been effective, in particular actions related to increasing capacities within administrations such as IT systems and their capabilities, and sharing of risk information between Member States. ·Higher quality / more comprehensive / efficient / timelier national customs threat and risk assessments. One Member State reported that constant revision and upgrade of the national IT systems that are instrumental in processing and distributing risk information to the relevant entities within the customs administration have undoubtedly strengthened the risk management capabilities. One customs’ investments in risk management innovation have provided better understanding of logistical flows and emerging risks and novel techniques such as artificial intelligence (AI) help to determine risks on incoming goods. One Member State reported that international working groups have provided information and understanding for developing risk management, which has improved the quality of risk management. The organisation is better prepared for the rapidly changing operational environment and their capability to react to new emerging threats has increased. One administration provided a comprehensive list of the results achieved, including actions against undervaluation. Declaration of postal consignments have made it possible to carry out control measures for small-value consignments. AI and automation of processes have allowed automated information analysis. The establishment of the Single Customs Control Support Centre has ensured more efficient and more complete use of the available information systems and technical resources. Finally, the installation of video surveillance system at customs control points has increased efficiency of customs and border controls, ensuring protection of the national economic border. Another Member State reported that activities of the RALFH group are used to improve control and operational procedures in seaports, thus positively affecting the quality of operations carried out by customs officers. Jointly implemented RALFH projects increase the efficiency of controls carried out by means of risk analysis (targeting) and enable the detection of e.g. weak points in the goods flow system.

·Better risk management thanks to more consistent / effective sharing and deployment of national customs threat and risk assessments in the CRMF. One Member State reported increased awareness of financial and other risks through CRMS information sharing. One Member State’s authorities have experienced better and more effective risk management and targeting activities as a result of EU-wide cooperation and information sharing, which have contributed to raising awareness of new threats and thereby the creation of new national risk profiles, better risk assessment through fine-tuning risk profiles already in place, and controls planning including better resource allocation. Another authority reported that the availability of data allows for more effective evaluation of risk mitigation measures. All available risk information (national and international) has been collected in a single information system with flexible data search and selection. In addition, customs controls are carried out based on the information obtained from a single data exchange network of X-ray control systems used by the customs authorities. One Member State reported that seizures data they receive from some other EU partners contains information, which is very useful for the national analytical models and allows for a more precise targeting. One Member State’s customs noted that frequent and timely exchange of risk information and data between Member States, other competent authorities and the Commission enables a more efficient and selective selection of risk shipments and provides necessary assistance in national threat and risk assessment. Another Member State reported a bilateral cooperation project with a neighbouring Member State related to ENS declarations. This has served to ensure the use of relevant information from both Member States in the analysis of ENS declarations, regardless of where the goods are presented, thereby closing gaps that could previously been exploited by illicit traders. The authorities of one Member State reported that the activities of the cooperation centres for customs, police and border guards on the borders have contributed to effective controls of illegal cross-border movements of excise goods and other goods, to direct and quick exchange of information with law enforcement authorities allowing criminals and migrants to be stopped and detained, to revealing VAT fraud abuse (extortion) i.e. forgery of customs signatures and seals on tax free documents, to the disclosure of the use of false vehicle registration numbers, and to uncovering uncompleted procedures for export of goods from the EU. 10.1.3.8.Outcomes Extent to which the actions described above have improved implementation of the CRMF and enhanced customs risk management Not at all To a limited extent To some extent To a great extent No reply - 2 13 10 1 Respondents were asked to which extent the implementation of the CRMF and customs risk management have improved the implementation of the CRMS and enhanced customs risk management, and to describe the progress made. Ten Member States agreed that the actions related to objective 4 have improved implementation of the CRMF and enhanced customs risk management to a great extent, and thirteen (13) Member States agreed to some extent. Progress reported mainly related to increased cooperation and sharing of risk information between Member States including through CRMS, and enhanced financial risk management – these are key parts of the CRMF and therefore this shows the significant progress made by Member States to implement it. Several Member States also reported enhanced risk analysis through new or improved IT systems and recruitment or training of staff. ·Enhanced cooperation and sharing of risk information. Four (4) Member States specifically highlighted enhanced cooperation with other Member States. For example, one of them stated that the participation in ODYSSUD group meetings has helped to increase the level of cooperation and coordination. The exchange of information and the sharing of best practices between the major southern ports (member of the ODYSSUD group) help to ensure the equivalent level of control and trade facilitation for legitimate trade. Two (2) other Member States pointed to better information sharing and common approach to undervaluation issues leading from cooperation with neighbours and with EU Member States. One Member State highlighted that the use of CRMS RIFs has strengthened the implementation of CRMF to a great extent, broadening the scope of risk areas, including regular updates of risks and the picture of risks in other Member States, leading to better and more effective risk management. One Member State reported that risk information exchanged through CRMS is exploited to a great extent by creating national risk profiles responding to newly identified threats and risks. Another Member State reported progress including evaluation of information shared via CRMS RIFs, periodic assessment of national risk profiles based on CRC, and control campaigns (PCA and JCOs) which have improved the implementation of the CRMF. One Member State stated that all received RIFs through CRMS are transmitted to the national register for risk analysis, where they are evaluated and analysed, appropriate measures are implemented to minimise risks and provide feedback on the RIFs through CRMS. They also regularly evaluate and analyse all relevant risk information from other available national and international sources and in the event of a risk transmits it to CRMS. Another example provided by a Member State listed the outcomes of the cooperation in the border centres. It includes more effective risk analysis in the selection of vehicles for inspection during fuel transports, disclosures of false exports, disclosures of VAT fraud, more effective supervision and control over the movement of means of transports and goods and disclosure of irregularities, as well as increasing the level of correct application of customs procedures, collecting due duties, increasing the ability to respond to tax free irregularities, identifying and limiting the activities of criminal environments and uncontrolled movement of people. ·Enhanced financial risk management. Eight (8) countries reported progress in relation to improved handling of financial threats and risks. For example, one Member State reported that it used the EU Automated Monitoring Tool (AMT/THESEUS) system. This system is developed by the Joint Research Centre (JRC) of the European Commission and is used by Customs in the EU, OLAF and OLAF’s partners in the EU Member States. The AMT calculates estimates of baseline prices for goods imported in the EU, for each combination of product, third country origin and Member State destination. It also generates automated alerts for price outliers in trade data. One Member State reported developing risk profiles for specific headings and importers and enhancing customs controls as a result. Because of this measure, undervaluation and the activity of EOs initiating undervaluation have been significantly reduced. Six (6) Member States finally pointed to the implementation of FRC and the usefulness of the rules in supporting a common methodology and method of conducting risk analysis at the EU level. ·Better risk analysis through implemented / improved IT solutions. A Member State reported that all implemented IT solutions at national level have led to improvements of risk management processes and analysis. The advanced IT systems contribute to the timely assessment of threats and risk. The new IT tool enables better scoring of import customs declarations, better reporting and provides statistical overviews for further strategic decisions.

In another Member State, the greatest progress has been achieved by the introduction of an electronic system of risk analysis for low-value shipment in express couriers at air traffic, which enables more efficient risk management in terms of easier identification of risk for different risk areas. In another Member State, the implementation of the new functions of the risk engine used since mid-2018 has led to more risk-oriented selections of declarations. In another Member State, improvements in the national risk management system were introduced in order to provide better information feed to risk analysts while making decision on control measures. In 2018, new versions of the NCTS and ICS national systems were commissioned, where IT solutions implemented allow for better follow-up of control decisions and actions taken. Solutions were also implemented in order to deal with the multiple declarations submission phenomenon, which also supported the performance of related CRCs. ·Better risk analysis through recruitment and training of customs officers. One Member State’s customs reported progress in terms of ramping up risk analysis and the targeting service created in 2016 in the risk analysis process, in particular through the recruitment of several data miners. Another Member State reported they have created a more structured picture of risks and clear common guidance on how to address risks and continued advanced training for customs officers on how to identify and target risks. A third Member State stated that data analysts enable them to better target large quantities of data or use new techniques to enhance the performance of their risk engine by using new algorithms. 10.1.3.9.Encountered challenges, difficulties and barriers Have you encountered any significant challenges, difficulties or barriers that have kept you from implementing desired action or making more progress in the implementation of the CRMF? Yes No No reply 14 10 2 Ten (10) Member States customs administrations have not encountered any significant challenges, difficulties or barriers in implementing the CRMF. However, fourteen (14) Member States reported some barriers that have kept them from implementing desired action or making more progress. The identified barriers are similar and can generally be grouped by insufficient IT infrastructure, financial constraints, lacking human resources, and data availability i.e. deficient sharing of risk information between MS. Budgetary constraints were reported by five (5) Member States, which for two are specifically related to development of IT infrastructure. Similarly, another barrier to the effective implementation of the CRMF at the national level is insufficient IT infrastructure. For instance, one Member State pointed to the increasing complexity of some of the EU strategies and tools to challenge individual risks, e.g. FRC, which can be a challenge in terms of operationalisation within existing national electronic systems. Another Member State reported lacking infrastructure for the use of AI to support risk analysis. While another one further mentioned the long-term IT development, taking place throughout the entire Customs Union in line with the UCC demand for harmonised electronic customs processes. Two Member States reported that current IT systems simply do not yet fully support all their needs. Lack of human resources and/or expertise as a barrier to implementing the CRMF was reported by seven (7) Member States. For example, one Member State reported that increasingly limited human resources in combination with the need to recruit new personnel with specific data analytics skills prevent properly addressing new challenges arising from the tremendous increase in e-commerce related goods movements. The consequent ‘data explosion’, never seen before, must be addressed with new knowledge, tools and techniques currently not widespread. Another Member State stated that organisational restructuring and staff training have not been sufficient to address deficient capacities (hiring practically froze due to the recent financial crisis and recent organisational restructuring did not take under consideration the increased needs in risk management staff). While in another Member State, there are limited human recourses and limited expertise due to the small size of the department and many responsibilities of customs officers at the same time. A Member State referred to the significant human resource burden that appropriate action in case of suspected undervaluation involve. Five (5) Member States referred to problems relating to sharing of risk information between Member States. The administration of one Member State explained that normally more than one Member State is affected by the same Organised Crime Group (OCG), therefore risk management needs to establish a comprehensive approach to link financial and non-financial risk assessment between the Member States. This demands closer cooperation and information exchange between all involved agencies in the concerned Member States. According to this administration, it is still a big problem to get information and data from other Member States for analysis purposes because of lacking legal basis for the exchange of data. In addition, Member States do not use the EU legal framework for cooperation and information in a harmonised manner. One Member State further noted that uniform access to customs data in the EU would enable a more uniform and effective implementation of analysis and information exchange at EU level. Another Member State pointed out that information and data sharing is the core principle of EU cooperation under CRMF and that General Data Protection Regulation (GDPR) created a big legal barrier against this core principle. While a Member State expressed difficulties in dealing with the uncertainties related to data exchanges and the conditions behind it, they stated that although Article 46 UCC and the Naples 2 Convention are clear on the use cases, the liability with regard to personal data tends to slow down all requests related to data or information exchange. In addition to the barriers reported above, one Member State further reported the problem of multi-reporting of the same information via different tools / applications (AFIS, mutual assistance (AM) communication, RIFs, information in paper form). The administration suggested that clarifications and concrete rules should be established and binding for EU Member States customs and EU institutions. According to one Member State, there is the risk that the implementation of FRC would lead to a substantial increase in control recommendations with no increase of control capacity and, consequently, the impact management has to be considered. For another customs the single largest challenge remains changing trade patterns such as e-commerce, the increasingly larger volume of data makes implementing the CRMF a challenge.

10.1.4.Other actions taken by the Commission under Objective 4 10.1.4.1.ICS 2 Context In the context of developing necessary risk management capaciti