CBP Takes Action Against Certain Bonds (New "Current Issues" from CBP's Revenue Division Bond Team)

CBP to Reject Completed 301 Bonds with Inaccurate Printed Liability Limits, Etc.

According to the Bond Team, it has been advised that completed CBP 301 (bond) forms with printed "liability limitations" associated with the surety or surety agent are not acceptable.

Surety and surety agent authorizations are formally recorded with CBP via a separate, distinct process. As such, printed limitation language on the bond form can unnecessarily confuse or mislead parties who use that form. CBP adds that this is especially true in the numerous identified instances in which the printed limitations on the bond form do not match the formally authorized limits recorded with CBP.

Effective immediately, CBP states that any bond form submitted to the Revenue Division in which a printed limit of liability on the form is less than the liability amount of the bond or greater than the specific agent and surety limits recorded with CBP, will be rejected.

The Revenue Division proposes to reject all bond forms containing any printed "liability limitations" at some point in the future. Sureties and bond filers are advised to refrain from printing any new bond forms containing this type of language.

(See ITT's Online Archives or 07/13/07 news, 07071310, for previous BP summary stating that (according to CBP Headquarters) executed importer/brokerCBP 301 bonds will be rejected if the bond amount exceeds the liability underwriting amount included on the pre-printed CBP 301 form, etc.)

Action to be Taken Against Continued Use of Insufficient Continuous Bonds

The Bond Team states ithas identified isolated instances in which principals and brokers are using continuous bonds that have been deemed insufficient. In most instances, Automated Commercial System (ACS)/Automated Broker Interface (ABI) edits will prohibit insufficient continuous bonds from being used on entry transactions; however, the Bond Team has identified parties who are circumventing these edits.

Effective immediately, the Revenue Division may take one or more of the following actions when it identifies that a principal has been made aware of the insufficiency of their continuous bond yet continues to use that bond for any CBP transaction(s):

Other continuous bonds which the principal is using in combination with their own bond will be re-evaluated and may be rendered insufficient (e.g., a broker's bond is used for entry, and the principal's bond is used for summary)

The Revenue Division, in conjunction with the Ports of Entry, may input cargo criteria to preclude immediate release of the principal's goods

As a last resort, the importer record may be voided

Bond Submissions via Fax More Likely to be Rejected

The Bond Team states that itreceives most bond submissions via email or fax directly from the bond filer, and has previously advised the trade that email submissions tend to be of a higher quality.

As it has undertaken an initiative to image all existing continuous bond paperwork, the quality of bond paperwork is of even greater consequence because poorer quality documents cannot be successfully imaged.

In order to insure the success of its imaging efforts, the Bond Team states it will continue to reject illegible (or otherwise unreadable) bond documentation (submissions received via fax are more likely to lack the quality and consistency required).

Bond Team to Correct Importer Records for Incorrect Quebec and Newfoundland Province Codes

According to the Bond Team, CBP revised the acceptable 2-digit Canadian province codes for Quebec and Newfoundland (including Labrador) several years ago to conform to Canadian postal standards. The correct codes for these provinces are "QC" and "NL," respectively. (The previous codes were "PQ" and "NF.")

All importer record additions or changes filed with CBP should utilize the correct Canadian province codes as noted on the reverse side of the CBP 5106 form.

Asapproximately 7000 active importer records referencing one of these incorrect province codes remain on file with CBP, the Bond Team will assist the trade with replacing these two obsolete codes on all existing, active importer records.

Effective on or around July 27, 2007, all active importer records on file with Canadian province codes "PQ" or "NF" will be corrected to "QC" and "NL" respectively. The Bond Team notes that no other changes will be made to these importer records beyond simply correcting the invalid province codes. CBP will not require bond riders for the impacted importer records.

CBP Revenue Division Bond Team's Current Issues, dated 07/27/07, available at http://www.cbp.gov/xp/cgov/import/communications_to_trade/pilot_program/news_develop/