CBP Releases New Guide on Setting Bond Amounts, Updating 1991 Directive

Changes in the new guidance document include updating the language in the 1991 directive to reflect current terminology, as well as updates CBP has made to its bonding policies and procedures "over the last 30 years," said Matthew Zehner, vice president of surety information and analysis for Roanoke Insurance Group, in an interview.

The new guidance “memorializes some widely utilized but previously unwritten procedures,” Michael Brown, CEO of Avalon Risk Management, said by email, adding that the document is a "welcome update to the outdated 1991 directive."

"Publication of this guidance is an important step along the way to updating and standardizing CBP’s bond policy and administration across the agency," CBP said in a CSMS message issued the following day. "It serves to address gaps, to clarify what CBP and the trading public are responsible for when setting and maintaining sufficient bond coverage, and make clear what factors are considered by CBP in setting a required bond amount in particular cases."

Changes reflected in the new guidance include the "transition of customs functions from the Department of Treasury to the Department of Homeland Security, creation of CBP, changes to CBP’s internal handling of various aspects of bond policy and procedure, the introduction of new, and termination of unnecessary, bond requirements, and the creation of the Automated Commercial Environment (ACE) eBond test,” CBP said.

Changes in the guidance also include updated bond amounts, as well as changes to rounding amounts for continuous bonds. The rounding convention that used to only apply to activity code 1a, which is for continuous drawback payment refunds, is now in effect for all continuous bonds. That rounding method was rounding in increments of $10,000 for bonds under $100,000 and in increments of $100,000.

All of those changes reflect current policy, Brown said. “Drawback bonds, for instance, have been decremented for years,” he said. “CBP has also applied a $50,000 minimum" to activity code 3 bonds “for quite some time." And the use of the rounding conventions has "been in use for a long time," Brown said.

Another subsection was added on “record retention,” which clarifies that “under no circumstance” should CBP personnel “give back a primary or only record of a bond to the originator of the bond if the bond is to be canceled,” CBP said in a document noting the differences between the new guidance and the previous directive.

CBP said the new guidance also includes new information on bond Activity Codes 3a3, 11, 12, 14, 16 and 17, and “the Bond for Deferral of Duty on Large Yachts Imported for Sale at United States Boat Shows,” which was not previously provided. It also added a “Cash-in-lieu of Surety” section for principals who opt to use “cash-in-lieu of surety on a bond,” CBP said.