Every business is required to have a bond on file in order to import into the United States, but who is able to terminate the U.S. Customs Bond once it is in place?
A U.S. Customs bond is a 3-party agreement between the Principal on the bond, the Surety backing the bond, and U.S. Customs and Border Protection. As those are the three parties on the bond agreement, they are also they only parties that are able to cancel a bond.
The following is an explanation of each party and why they may choose to terminate a bond.
U.S. Customs and Border Protection
U.S. Customs and Border Protection is the government agency that oversees and requires U.S. Customs Bonds. While CBP is able to terminate the bond, they will typically only take this action when an importer has been deemed negligent or as a last course of action.
The Principle on the Bond (the Importer)
The principal on the bond is typically the importer that has purchased or owns the goods being brought into U.S. Commerce. An importer will typically terminate a bond when they are placing a new bond with a new Surety or when they must increase their bond.
The Insurance Company (The Surety)
The Surety is the insurance company that is financially backing the bond. A Surety must be approved by the U.S. Treasury Department in order to be able to write U.S. Customs bonds. A Surety will typically terminate a bond when an importer is no longer paying for the bond through them or when the Surety no longer wishes to hold that bond.
Trade Risk Guaranty is an insurance agency that works on behalf of the larger insurance company in order to help importers place a bond and provide claims assistance on the bond. Therefore, TRG has a vested interest in the liability the U.S. Customs Bond represents and is able to terminate the bond with the Surety.
Can Your Customs Broker Terminate Your U.S. Customs Bond?
While the Customs Broker has a very important role within the process of importing into the United States, they are not one of the three parties on the bond. Therefore, a Customs Broker is not able to elect to cancel an importer’s bond without that importer’s consent.
However, since a Customs Broker does have an active power of attorney with each of the importers they are working behalf, they are able to put a bond termination through to the Surety on behalf of the importer. This should not be done without the importers consent, however, since the broker does not carry the liable associated with the U.S. Customs Bond.
