On January 4, 2015, our office filed the first continuous eBond with Customs and Border Protection (CBP) once the eBond process was released to the industry. Since eBond took effect, the landscape of filing and processing of CBP bonds has significantly changed. While the processing time of the continuous bonds has greatly decreased, there are a few impacts of the eBond process that many people may not be aware of.
Information that no Longer Appears on Bonds
In order for the eBond process to work, CBP has removed the connection of the principal’s name and address from the bond itself. What this means is that when an eBond is filed by a surety, the surety supplies CBP with the bond information, such as the bond type and bond amount, as well as the CBP Identification Number (the FEIN/IRS number for the principal(s) and user(s)) to be listed on the bond. No longer does the bond submission include the name and address of each entity on the bond, since CBP relies on the unique FEIN/IRS number to identify the prinicipal in ACE. Further, the CBP computer will now utilize the name and address on file already in the CBP 5106 system for that CBP Identification Number.
How to Update Names & Addresses on File with CBP
Before eBond went into effect, an entity’s name and/or address on file with CBP for a continuous bond could only be updated by filing a rider along with the 5106 form. Neither the address, nor the name, could be changed without the consent and formal acknowledgement by the principal and surety company, as the rider was required to be signed by a titled officer of the principal and an authorized representative from the surety. However, since CBP no longer requires a rider to be completed, the name and/or address on file for an entity can be updated by simply filing a 5106 form. The 5106 form may be signed by an individual employed by the entity or anyone with a power of attorney on file for that entity, such as a Customs broker. Based on this change, it can be difficult for companies to ensure the information on file with CBP is correct and has not been changed without their knowledge.
Insufficient Bond due to Invalid/Bad Address
CBP typically mails documentation to the principal directly, such as liquidation notices and claim notices, utilizing the name and address on file in the CBP 5106 system for the entity. If the address on file is incorrect and CBP receives the mail back as undeliverable CBP will make all bonds in effect for that entity insufficient until the address on file is updated. When a bond is insufficient, CBP will not allow the entities on the bond to use the bond. The updating of an address and the lifting of this insufficiency can take several days, leaving the entities on the bond unable to utilize the bond, which can mean delays in releasing merchandise or in the alternative; posting and incurring additional charges for single transaction bonds, until the insufficiency has been lifted. Therefore, the importance of maintaining the correct address on file cannot be emphasized enough.
The Freeze Program
With this in mind, it is important that brokers and principals be aware the options available to them. One such option, is the “Freeze Program” that CBP has had in effect for many years that could help the principal control the information CBP has on file. By filing a letter with CBP, a principal can specify to CBP the individuals authorized to make changes to the name and address information on file. The filing of this letter does not change anything else with CBP, as the letter will only freeze the CBP Importer number to ensure no individuals, other than the individuals listed on the letter, make changes to the name and/or address on file. It is also important for participants in this program to review the individuals listed on the letter periodically. If the individuals on the letter must be updated or amended, a new letter can be filed with CBP.
Our office has filed many of these letters with CBP for our clients and we are very familiar with the process. If you would like our office to help freeze a CBP Importer Number, please contact our office.