Importer Security Filing (ISF) Update


As a timely reminder to our valued clients, please be aware that Customs and Border Protection (CBP) will commence enforcement of the Importer Security Filing (ISF) regulations, which took effect on January 26, 2009, beginning on January 26, 2010. The new regulations require certain data elements and information be provided by importers to CBP with respect to ocean cargo destined for U.S. ports of entry prior to the cargo being loaded on the outbound vessel. This advance notification is now required by CBP to more effectively screen incoming ocean cargo to ensure security and safety at U.S. ports. Under the regulations, importers will be required to post a bond to ensure the new ISF requirements are complied with. To enforce the new regulations, CBP will issue liquidated damages in the amount of $5,000.00 per violation for infractions including but not limited to late and inaccurate ISF filings.

Many brokers and producers have asked: How does this affect our clients who import and conduct Customs business? In furtherance of the previous information provided on our Current News and Information page of our website, it is important to note that if your client presently has an active CF301 Continuous Customs bond under activity codes 1, 2, 3 or 4, they are already in compliance with the ISF bond requirements and need not do anything further if they choose. For those parties wishing to act as ISF filers on a continuing basis without having a CF301 continuous Customs bond on file, they may file a stand alone ISF “Appendix D” continuous bond with Customs in the amount of $50,000.00 which will only secure their obligations as ISF filers. This bond requirement would only apply to entities wishing to be ISF filers and who do not presently have a CF301 continuous bond on file. There has been some speculation among the trade community that an importer or bond principal who presently has a continuous Customs bond on file may limit their liability for ISF violations by filing a separate ISF “Appendix D” bond in addition to their continuous Customs CF301 bond. While a bond principal may temporarily “cap” their claim exposure for ISF violations to the $50,000.00 limit of liability under the ISF “Appendix D” continuous bond, we have been advised by Customs officials that unsatisfied liquidated damage penalties which exceed the amount of the ISF bond could result in the bond being rendered insufficient by CBP and further, if the ISF importer has a continuous CF301 bond on file under the same importer number, CBP may obligate that bond if the ISF bond is rendered insufficient.

For those importers who do not currently have a continuous Customs bond activity 1, 2, 3 or 4, CBP will permit the filing a separate stand alone ISF single transaction bond known as the “Appendix D” ISF bond. This bond will only cover the filing of an individual ISF and will be executed in an amount of no less than $10,000.00. The ISF single transaction bond must be submitted to CBP within (12) hours of the receipt of the ISF and a separate CF301 import single transaction bond must be filed at the time of entry to secure the duties taxes and other obligations which are not secured by the ISF bond. If an importer without a continuous Customs bond elects to file their entry and the ISF at the same time electronically, they may do so as a “Unified Filing” and continue to utilize a CF301-1 importer single transaction bond without the need of a separate ISF single transaction bond. The single transaction bond liability calculation of value plus duty or three times the value in the case of restricted merchandise will still apply. For importers who do not currently have a continuous Customs bond on file, it is important to discuss these new requirement and the bonding options with your Customs broker or Freight forwarder to ensure timely and proper compliance with the new regulations. If no bond has been filed to secure the ISF, Customs cannot issue a claim for liquidated damages, however; Customs has indicated they will not release any cargo unladed at a U.S. Port until the required bond and ISF documentation is filed.

Timely and accurate compliance with the new ISF regulations will be critical to avoiding claims for violations. CBP has compiled comprehensive FAQ with responses which can be accessed by going to the following link on the CBP website. We encourage importers and those conducting Customs business with questions pertaining to ISF to review this FAQ and seek the advice of their Customs broker, freight forwarder or Customs attorneys to ensure they are prepared to meet these new requirements.

C.A. Shea and our surety partners are accepting applications and submissions for ISF continuous and single transaction bonds and all submissions will be underwritten and quoted on an individual basis. However, to reiterate, only those importers and bond principals conducting Customs business who do not have a CF301 continuous bond on file under activity codes 1, 2 3 or 4 must make arrangements to meet the new bonding requirement prior to January 26, 2010.