Electronic Customs Security Rules

Summary#

The Financial Security (Electronic Means) Regulations set rules for how security (guarantees or deposits) required under the Customs Act must be given and handled. They require security to be submitted through an electronic system in most cases, spell out who can act as a security provider, and set time limits for notices and payments. The regulations were published on March 13, 2024.

What it does#

• Requires most customs-related security to be given through the electronic system specified by the Minister.
• Lists the types of organizations that can act as a security provider (examples: approved surety insurers, deposit-taking banks and credit unions, and members of the payment clearing system).
• Treats certain clauses as automatically part of every written security agreement, including a promise that the security provider will pay if the debtor fails to pay, subject to limits.
• Sets timelines and rules for demands and payments:
  • A security provider must notify the Minister at least 30 days before terminating a security agreement.
  • If the government sends a demand, the security provider has 60 days to pay or to send information to challenge the demand.
  • If a security agreement has ended, the government can make a demand within one year after expiry or termination.
• Allows the Minister to require non-electronic security in exceptional circumstances (for example, infrastructure problems, natural disasters, or other practical impossibilities).
• Keeps most existing securities valid until they expire or are terminated, except for security given under the Accounting for Imported Goods and Payment of Duties Regulations (which are treated differently).

Who's affected#

• Importers and businesses that must post customs security under the Customs Act.
• Organizations that provide guarantees or surety for those businesses (insurers, banks, credit unions, members of payment clearing systems).
• Customs brokers and other agents who arrange security on behalf of importers.
• The government office that receives and manages these securities (the Minister named in the regulations).
  If the text is unclear about a specific group, that uncertainty is noted above.

Why it matters#

• Moving most security transactions to an electronic system aims to speed up and standardize how guarantees are given and claimed.
• Security providers have a clear, limited time to respond to demands; they may be required to pay even if they are disputing the debtor’s liability.
• Importers and their guarantors will need access to the specified electronic system and must follow the new notice and timing rules to avoid surprises or unexpected payments.
• Existing securities mostly stay in force until they end, so immediate disruption should be limited except where other rules (noted above) apply.