Electronic Customs Security Regulations

Summary#

The federal government published a proposal called the Financial Security (Electronic Means) Regulations in the Canada Gazette on November 26, 2022. It would require most customs security (the money or guarantees importers give to cover duties and other amounts) to be provided and managed through an electronic system specified by the government. The proposal is open for comment for 30 days.

What it does#

• Applies to security required under the Customs Act and the Customs Tariff.
• Requires security to be either a deposit or a written security agreement, and—except in limited situations—to be given through the electronic system the Minister specifies.
• Sets the information a surety must provide or confirm in that system, including:
  • agreement number;
  • names of the parties;
  • relevant agency program;
  • business number;
  • amount of the security;
  • applicable legislative authority;
  • validity period.
• Requires the debtor and surety to update that information within 2 days of any change.
• Limits who can act as a surety to certain financial institutions and recognized insurers (examples listed in the proposal).
• Allows the surety to give at least 30 days' electronic notice before terminating a security agreement.
• Lets the Minister send a notice of claim to a surety when an importer fails to pay; the surety then has 60 days to pay or supply information to dispute the claim.
• For agreements that have expired or been terminated, the Minister must send a claim within one year after expiry/termination.
• Provides a transitional rule: existing securities (except those under the Accounting for Imported Goods and Payment of Duties Regulations) remain valid until they expire or are terminated.
• The proposal also explains when the regulations would come into force relative to section 303 of the Budget Implementation Act, 2022, No. 1.

Who's affected#

• Importers and businesses that currently post security for customs duties and related amounts (referred to as “debtors”).
• Financial institutions, surety insurers, credit unions and other entities that act as sureties or provide guarantees.
• The Canada Border Services Agency, which will administer the electronic system and enforcement steps.
• If unclear: the proposal does not spell out technical details of the electronic system (so other service providers or brokers may be affected depending on how the system is built).

Why it matters#

• Moving most customs security to a single electronic system could speed up processing and make records easier to manage.
• Businesses that post security will need to use the specified electronic system and keep information current (within 2 days), which may require new procedures or software.
• The rules tighten who can be a surety and set clear, relatively short timelines for payment or dispute (60 days), which could change the financial risk and cash-flow implications for importers and sureties.
• This is a proposal, not final law: stakeholders had 30 days from publication to comment; the final rules could change based on feedback.