Surety Bond

Customs Surety Bonds (Form 301 & D120)

A **Customs Surety Bond** is a binding contract used to guarantee that a specific obligation will be fulfilled between the **Principal** (the importer or carrier) and the **Obligee** (the customs authority, such as CBP or CBSA).

It acts as an insurance policy for the government, ensuring they are paid duties, taxes, and fees if the principal defaults. For carriers, holding a valid surety bond is the primary requirement to become a **[Bonded Carrier](/index.php?title=Bonded_Highway_Carrier_(Customs_Glossary))**, allowing the movement of uncleared goods inland.

**United States Form:** CBP Form 301
**Canada Form:** CBSA Form D120

1. History of Surety Bonds

The concept of suretyship dates back to ancient Mesopotamia (circa 2750 BC), where the Code of Hammurabi recorded the first known laws regarding financial guarantees between farmers and merchants.

In the context of modern customs:

**United States:** The use of customs bonds was formalized significantly under the **Tariff Act of 1930**. This act empowered the government to require security to protect the revenue of the United States, evolving into the modern *Continuous Bond* system managed electronically via ACE.
**Canada:** The *Customs Act* establishes the requirement for financial security. Historically, this was a paper-heavy process involving the physical stamping of the D120 form. In recent years, the **[CBSA Assessment and Revenue Management (CARM)](/index.php?title=CARM_(CBSA_Assessment_and_Revenue_Management))** initiative has modernized how importers post security, though carriers still rely heavily on the D120 process for bonded movements.

1. Why Carriers Need a Surety Bond

A "Bonded Carrier" is simply a trucking company that has posted a surety bond with customs. This bond gives them specific privileges that non-bonded carriers do not have.

Permitted Activities

With a valid bond, a carrier can:

**Move Goods Inland:** Transport goods to an inland [Sufferance Warehouse](/index.php?title=Sufferance_Warehouse_(CBSA)) for clearance away from the congested border.
**Transit Rights:** Move goods through the country (e.g., USA to USA through Canada, or Canada to Mexico through the USA) without paying duties.
**Carry Special Cargo:** Transport unreleased goods, such as **[In-Bond](/index.php?title=In-Bond_Shipment_(Customs_Glossary))** shipments or international waste.

1. United States: CBP Form 301

In the U.S., the bond is filed using **CBP Form 301**. Since 2015, most bonds are filed electronically through the **eBond** system in ACE.

Continuous vs. Single Transaction

**Continuous Bond:** Covers all transactions at all U.S. ports for one year. It renews automatically. This is the standard for carriers.
**Single Transaction Bond (STB):** Covers a one-time entry. This is rarely used by carriers because it does not provide standing authority to move freight.

Activity Codes

When filing Form 301, the "Activity Code" determines the bond's purpose.

Code	Name	Description
1	Importer or Broker	Covers payment of duties and taxes on entries.
2	Custodian of Bonded Merchandise	The Carrier Bond. Required to transport in-bond cargo (IT, T&E, IE).
3	International Carrier	Required for airlines/vessels to enter/clear; less common for highway trucks unless transporting passengers.

- Minimum Bond Amount:** Generally **$50,000 USD** for Activity Code 2.

1. Canada: CBSA Form D120

In Canada, the bond is filed using **CBSA Form D120 (Customs Bond)**. Unlike the U.S. eBond system, the Canadian process often involves physical signatures and stamps, though this is evolving with CARM.

Bond Types

**Bonded Highway Carrier (D3 Code):** Allows the carrier to move goods to an inland sufferance warehouse or transit through Canada.
**Bonded Freight Forwarder:** Allows a forwarder to move goods and deconsolidate shipments.

Posting Security

To become a bonded carrier in Canada, you must submit the D120 form along with your carrier code application.

**Minimum Amount:** Typically **$5,000 - $25,000 CAD** depending on the mode of transport and fleet size.
**Regulations:** Governed by *Customs Memorandum D1-7-1*.

1. Registration Guide: How to Get Bonded

1. 1. United States (CBP)

1. **Find a Surety Agent:** You cannot buy a bond directly from CBP. You must use a licensed surety agent (many insurance brokers specialize in logistics). 2. **Application:** Submit your company financials to the agent. 3. **eBond Filing:** The agent submits the data to CBP via the ACE portal. 4. **Filer Code Assignment:** Once approved, CBP assigns a **[Filer Code](/index.php?title=Filer_Code_(CBP))** (often your SCAC) which you use to file electronic in-bonds.

1. 1. Canada (CBSA)

1. **Obtain Form D120:** Your surety company or insurance broker will prepare this form. 2. **Sign and Seal:** The document requires the original signatures and corporate seals of both the Surety and the Principal (Carrier). 3. **Submit to CBSA:** Mail the original bond (and Carrier Code application if new) to the **CBSA Commercial Registration Unit** in Ottawa. 4. **Wait for Approval:** Processing can take 10-30 business days.

1. BorderConnect Tie-In

Once your bond is active, you must configure BorderConnect to use it.

If You Are the Bonded Carrier

To file [ACE In-Bonds](/index.php?title=ACE_In_Bond_(CBP_Shipment_Type)) or [ACI eManifests](/index.php?title=ACI_eManifest_Software_User_Guide_(CBSA)) under your own bond: 1. Navigate to **Account > Company Profile**. 2. **For US:** Enter your **IRS Number** (Tax ID) in the "Bonded Carrier IRS Number" field. 3. **For Canada:** Ensure your Carrier Code is set to "Bonded" in the settings.

If You Are Filing for Another Carrier

If you are a service provider creating a [QP In-Bond](/index.php?title=QP_In-Bond) for a different trucking company: 1. Go to **U.S. In-Bonds > Bonded Carrier ID Numbers**. 2. Click **New Bonded Carrier ID Number**. 3. Enter the **Carrier Name**, **SCAC**, and **IRS/Tax ID**. 4. This allows you to select them as the "Principled Party" on the manifest.

1. References

**CBP Form 301 PDF:** [Official CBP Form 301](https://www.cbp.gov/document/forms/form-301-customs-bond)
**CBSA Form D120 PDF:** [Official CBSA Form D120](https://www.cbsa-asfc.gc.ca/publications/forms-formulaires/d120-eng.html)
**US Regulation:** [19 CFR Part 113 - CBP Bonds](https://www.ecfr.gov/current/title-19/chapter-I/part-113)
**Canada Regulation:** [Memorandum D1-7-1: Posting Security for Transacting Bonded Operations](https://www.cbsa-asfc.gc.ca/publications/dm-md/d1/d1-7-1-eng.html)