U.S. Customs to Require a Bond for Late ISFs

December 29, 2014
By Robert Stein

ISF-D bond piggy bank

On December 11, Customs and Border Protection (CBP) announced that beginning January 10, they will no longer allow ISFs to be filed late without a bond.

Up until now, filers could file a late ISF without a bond if they used a special indicator when filing. For importers without a continuous bond, this option was supposed to be used on a one-time basis, allowing ISF information to be transmitted to CBP even if it was late. This option was typically used by importers with one-time or infrequent transactions, who often found themselves with shipments where the ISF information was not provided to the filer in a timely manner. In those circumstances, their only option was to secure a single transaction ISF-D bond or to have the filer transmit the “late ISF – no bond” indicator. Most surety companies have been demanding full collateral ($5,000) in order to allow an ISF-D bond to be written for a late filed ISF, making it a less than attractive option for the majority of importers in those particular circumstances.

What does this change mean to importers without a continuous bond? As of January 10, late ISFs not covered by a continuous bond will require a single transaction ISF-D bond that must be secured by $5,000 collateral. Importers seeking to avoid the collateral issue should secure a continuous bond immediately, available through Mohawk Global.

Why is CBP changing this requirement?

It’s simple—by regulation, if CBP must issue liquidated damages (penalties) for a late or inaccurate ISF, those damages must be issued against a monetary bond. If there is no bond in place for the transaction, CBP has no mechanism to issue the liquidated damages. This change is a clear signal to importers and filers that CBP is preparing to begin more aggressive enforcement of ISF requirements, as they have previously advised the trade.

It’s no secret that CBP is getting more aggressive with ISF penalties. We have already seen a marked increase in penalty action as CBP begins to gear up their enforcement. Although ISF was implemented in 2009, with the promise of enforce compliance by 2010, we have seen limited enforcement activity from Customs until now. There have been some recent reports of CBP looking back as far as the beginning of 2012 for transactions that have serious ISF issues. This is a sure indication of CBP’s serious intent to beef up ISF enforcement.

There is no better time to evaluate your ISF compliance program then right now. Make sure you are working closely with your filer to ensure the best compliance possible with all ISF requirements.

Need help with your ISF compliance?

Mohawk can help you evaluate your ISF procedures and your risk for noncompliance. If you aren’t already using the ISF Progress Report in the ACE Portal, we can help get you started by assisting with report setup, allowing you to better monitor your ISF compliance.

Robert Stein is Vice President, Customs & Trade Compliance for Mohawk Global Logistics. Click here to read more about Robert.

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