AEO Overview

What is

AEO stands for ‘Authorized Economic Operator’, meaning a company that is recognized for its excellent import and export safety management.
Among those involved in trade, such as exporters, transporters, warehouses and customs companies, AEO is a company approved and authorized
by KCS for its excellence through review in compliance with regulations, internal control systems, financial solvency, and safety management.
In other words, customs authorities certify exporters and importers who are taking measures to enhance the safety and security of goods traded
between countries, through the establishment of an internal control system with good regulatory compliance.

AEO Authorization Criteria

Structure of the Authorization Criteria

The AEO authorization criteria consist of four areas:
legal compliance, internal control system, financial solvency and safety management.
The most critical and important criterion is the legal compliance and internal control system to enhance its legal compliance.

Among the four criteria, the standards of financial solvency, safety management and internal control system are essential and must be met basically.
In particular, the internal control system is evaluated separately for each applicant, and the result of the evaluation should be not less than 80 points.
For companies that meet the three criteria above, AEO certificate classes are determined by measuring the legal compliance points separately.
Companies with an assessment score of 80 or more points in legal compliance acquire "A“, companies with the assessment score of 90 or more
points get "AA" , and companies with the assessment score of 95 obtain "AAA“.

Criteria Definition
Legal Compliance Evaluation on the compliance level under import/export related laws such as Customs Act, Foreign Trade Act,
Foreign Exchange Transaction Act, etc.
Financial Solvency Evaluation on the financial solvency to enable the implementation of compliance with regulations
(e.g. tax arrears, credit ratings, etc.)
Internal Control
Evaluation on the inner-departmental communication and control system related to business activities,
the flow of declaration-related documents, and accounting to maintain the adequacy of export and import declaration.
Evaluation on the safety of contractors, containers, access control, human resources, handling procedures,
facilities, equipments, IT, education, training, etc.

Authorization Ratings

Criteria Basic Requirements Rating Criteria
A ① Satisfy financial Solvency
② Satisfy safety management
③ Score of 80 or more in internal control system
score of 80 or more in legal compliance
AA score of 90 or more in legal compliance
AAA among AA rated companies,
the comprehensive audit shows that the company has:
- a score of 95 or more in legal compliance
- best practices

Benefits of AEO Authorization

Benefits in
  • Benefits in inspections such as downward adjustment of inspection rate or exemption from screening and inspection
  • Reduction of financial burden through monthly payment, omission of security, increase of credit security limit
  • Simplified procedures such as non-submission of price statement report, simplification of arrival notice, reduced rate of
    document submission, etc.
  • Benefits of self-assessment, simplified bonded transportation, self-post management designation
  • Priority in customs procedures when an emergency related to import and export occurs
  • Other benefits in customs administration procedures established by the Commissioner of KCS

*In addition to the above benefits, additional benefits such as exemption from inspection for a certain
period of time are available.

through Mutual
  • When importing into AEO MRA counterpart countries, documents submission rate and inspection
    rate will be reduced and swifter customs clearance will be possible
in Business
  • Maintain transactions with supply chain partners, particularly AEO authorized partners and create new clients Able to demand domestic trade partners of AEO authorized companies to strengthen safety management
  • Optimize the environment for new requirements of SCM at a corporate level through improvement of company's safety
    management level
  • Certified by the KCS as the best reliable company Enhance business competitiveness

AEO Authorization Process

  • STEP 01
    Submit Application

    Internal preparation period
    (3-4 months)

  • STEP 02
    Document Evaluation

    2 months

  • STEP 03
    On-site Evaluation

    2 months

  • STEP 04

  • STEP 05
    AEO Authorization


* Internal preparation – 7-8 months till close of audit      * time schedule can vary due to applying companies’ status or KCS audit schedule
  • The applicant’s export & import management status whether it satisfies AEO criteria is evaluated
    based on the documents submitted.
  • Verify whether the submitted documents conform with the actual export & import management status
    based on site examination.
  • After document evaluation and on-site evaluation, the results of the evaluation are submitted
    to the decision deliberation committee to determine whether certifiable or not, and the ratings thereof.
  • The Authorization Decision Deliberation Committee evaluates on overall operation of AEO such as
    1. 1. the Authorization of AEOs;
    2. 2. adjustment of ratings of AEOs;
    3. 3. assignment of authorized reserved companies;
    4. 4. cancellation of AEOs.
What are
  • For AEO ratings, both legal compliance score and internal control system score should be 80 or more, and
    financial solvency and safety management criteria should be met.
  • A ratings : score of 80 or more in legal compliance
    AA ratings : score of 90 or more in legal compliance
    AAA ratings : among AA rated companies, the comprehensive audit shows that the company has:
    - a score of 95 or more in legal compliance
    - best practices

AEO Authorization Evaluation Criteria

Formal Requirements Actual Requirements
Legal Compliance Financial Solvency Internal Control System Safety Management
  1. (1)Compliance on Customs Act
    and related Law
  2. (2)Adequacy of System Analysis
    Result of Total Legal Compliance
  1. (1)Corporate Scale
  2. (2)Adequacy of Financial
  1. (1) Documentation and
    implementation system for legal
    compliance and safety
  2. (2)Regular inspection and
  3. (3)Internal/external audit and
  1. (1)Contractor management
  2. (2)Containers and trailers management
  3. (3)Physical access control
  4. (4)Human Resource management
  5. (5)Handling procedure
  6. (6)Facility and equipment
  7. (7)Information Technology management
  8. (8)Education and Trainings
80 or more - 80 or more 70 or more

Formal Requirements

Area Criterion Details
  1. (1)Compliance on Customs
    Act and related Law
  2. (2)Adequacy of System Analysis Result
    of Total Legal Compliance
  • No ground for disqualification in the legal aspects of the applicant and the applying company
    (limited to the customs statutes and applicable laws)
  • The assessment score measured by integrated compliance system
    or on-site inspection is 80 or more points
  1. (1)Corporate Scale
  2. (2)Adequacy of Financial Solvency
    1. Complete payment of National
      Tax and Local Tax
    2. Financial sustainability to enable
      sincere observance with law
  • Company Scale : More than 50 acceptances of import / export declaration annually
    in the last 3 years
  • Financial Solvency
    ① Sincere National Tax and Local Tax Payment
    ② ‘Fair’ opinion from the accounting audit for the recent 2 years
    *For companies subject to the Act on External Audit of Stock Companies, one or
    more of the followings should satisfy
    1.Debt-to-equity ratio less than 200%
    of the average debt-to-equity ratio of companies in identical industry
    2.The credit rating level is above investment grade
    (within 12 months as of the application date) 3.Annual average sales growth of more than 10% over the last three years
    (based on amount)

Actual Requirements

Area Criterion Details
Control System
  1. (1)Preparing documentation and implementation
    system for Compliance and safety management
  2. (2)Regular inspection and modification/correction
  3. (3)Internal/external audits and
  1. (1)Promoting AEO and securing personnel & professionalism
    1. Establishing and sharing management policies (CEO)
    2. Organizing TF team and securing workforce
      1. 1. Overall Director(Executive level)
      2. 2. Director of import and export management (3 years)
      3. 3. The person in charge of business affairs (Manager / assistant
        manager of a department )
    3. Securing professionalism
      1. 1. Recruit certified employees (certified customs broker, Bonded goods caretaker,
        Country of origin labelling officer, etc)
      2. 2. Employ experienced workers(5years)
      3. 3. Provide a training for compliance and safety management
      4. 4. Document all the procedures on customs legality and import /export
        management etc and keep them up-to-date
  1. (2)Compose a council with the internal, import and export supply chain and the KCS
    1. Share information between export and import departments
      1. 1. Documented export and import procedures such as a manual
      2. 2. Share of the legal registers
      3. 3. Share AEO related information
    2. Active participation in customs administration development program
      1. 1. A winning or a commendation
      2. 2. Committee member activities
      3. 3. Customs related activities
    3. A regular discussion with the export and import supply chain (6 months)
  1. (3)Internal Inspection
    1. Activation of an ethical management policy & (e.g. an internal accusation system)
      illegal behavior prevention program
    2. Risk evaluation
      1. 1. Identification of risk factors
      2. 2. Evaluation of the risk factors
      3. 3. A management solution for the risk evaluation results
      4. 4. Evaluation and amendment of the management solution
    3. Internal Control Activity
      1. 1. All control activity for legal compliance and safety management
  1. (4)Establishment of history management system and
    operation system and external audit
    1. Establishing information management system for the estimation of required
      amount and origin determination
      1. 1. Related system and detailed statement
      2. 2. History management of related information such as price, quantity,
        trading partners, purchase route for goods purchased in and out of the country
    2. Information system of the movement of the imported & exported goods and related
      payment and receipt history
      1. 1. Related system and detailed statement
      2. 2. Identification of the information history (imported and exported goods,
        payments, customs refund related materials)
  1. (1)Contractor management
  2. (2)Containers and trailers management
  3. (3)Physical access control
  4. (4)Human Resource management
  5. (5)Handling procedure management
  6. (6)Facility and equipment management
  7. (7)Iformation Technology management
  8. (8)Education and Trainings
  1. (1)Safety management in delivery phase of goods
    1. Management of all stages; contract - manufacturing - storage,
      transportation, customs clearance, loading/unloading (Cargo) – departure
  2. (2)Safety management in receiving phase of goods
    1. Management of all stages: arrival – unloading/loading (Cargo)
      - storage, transportation – warehousing
  3. (3)Safety management for import and export business
    1. EDI system activation, security and verification, product history management
      and human system management, management of cooperation situation between
      business partners

AEO Post Management Consulting

Since the company has been designated as AEO company with AEO authorization, the company will go through an annual
self-assessment. This self-assessment is done through submitted documents and it aims to check if the AEO company’s export
and import management status is operated and managed properly in accordance with AEO criteria.
This audit is conducted against AEO companies to ascertain the fulfillment of AEO authorization criteria, and
especially as for importing/exporting companies, the areas include the legality of customs clearance.