What is a Customs Bond?

For a layman it is always difficult to understand financial terms. The question rises What is a Customs Bond In the easiest of terms, customs bond is a form of insurance or financial guarantee. Usually, it is between three parties. The parties involved are:

  • The insurance or surety company that issues the customs bond
  • The primary person who files the bond
  • CBP: customs and border protection

The custom bond is a form of guarantee for the customs and the border protection that if in any case the primary person who files the bond is unable to pay the dues then there is remedy for this kind situation i.e. CBP can claim the amount from the insurance company that equals the bond amount. At the same time, these bonds also ensure the insurance company that they can collect the money from the bond filer through any legal means because they have paid the CBP on the bond holders’ behalf. The main reason behind these bonds is that it guarantees the payment of import duties and taxes. All commercial imports require customs bond without commercial imports can’t enter a country.

There are several reasons that a bond holder may owe the money to the customs. The primary holder of the bond or the importer agrees to some conditions when he/she is making a placement of the bond. The conditions make sure to the agreement of paying all the duties and taxes in an appropriate way i.e. timely payments, completing entries, produce documents and substantial proofs of shipment, redelivery of merchandise on request, allow the inspection of the imports, compensation and liberation of the country that is the products are imported to and last of all agreement with the requirements of duty free entries.

There are different kinds of customs bond. These bonds depend on quantity, amount and the type of transaction that takes place. Most common and simple types of bonds that are used in the payment for the imported shipments are:


Simple Entry Bonds:

 These, as the name suggests, can be used once for only one transaction.

Continuous Entry Bonds:

 These can be used on annual basis. It can cover all the transaction made within one year. These bonds can save a lot in the favor of the importer.

Some other common types of bonds are import bonds, airport security bonds, international carrier bonds, foreign trade zone bonds and custodian bonds.

It is easy to file for a customs bond. Usually, there is a one page application, these forms are completed along with a power of attorney and signed by an official officer of the company. Bonds are issued in the alignment with CBP standards. They handle all the bond changes and alterations without any additional charges. Similar is the case when the bonds are filed for a renewal. The insurance company sends a notice or request of renewal on your behalf. This notice has a payment for the forthcoming bond tenure. After the renewal the insurance company collects the bond and delivers them to you so you are good to go again.For more visit us on What is a Customs Bond.