he Importer Security Filing (ISF), or 10+2 is one of the confusing concepts that importers come across often, especially those who engage in international trade activities. As a business that imports goods into Canada, you might be saying to yourself “I thought Importer Security Filings were a U.S. thing. Why do I need to worry about it then?” Well, most of the time, you won’t – unless your imported goods will be stopping in the United States before arriving in Canada.
In this article, we’ll help you understand what an Importer Security Filing (ISF) is and its purpose, in addition to the circumstances when Canadian imports might require an Importer Security Filing to be filed and who exactly is responsible for filing it.
So, what is an Importer Security Filing?
An Importer Security Filing (ISF) is a requirement for imports that are arriving at or passing through the United States. It tells U.S. Customs and Border Protection (CBP) that your goods will be passing through their ports and provides them with key information about your shipment.
U.S. Customs and Border Protection (CBP) requires that an Importer Security Filing (ISF) be submitted no later than 24 hours before cargo is loaded onto a vessel headed for the United States. Failing to file the Importer Security Filing or provide the required information could lead to the delay of your cargo, in addition to fines and monetary penalties.
In order to explain why an Importer Security Filing might be needed for a shipment destined for Canada, let’s discuss the purpose of an ISF.
The purpose of an Importer Security Filing
The main purpose of an Importer Security Filing (ISF) is to inform U.S. Customs and Border Protection (CBP) about shipments passing through their ports. In its efforts to safeguard the country from acts of terrorism and illegal activities, CBP continuously screens for and identifies high-risk shipments. They need to ensure that shipments do not contain dangerous or prohibited items.
Essentially, CBP wants advanced knowledge about what kind of cargo is coming, where it came from and where it’s going. This allows U.S. customs to narrow in and utilize resources to help protect the country by catching bad guys doing bad things. This is where the Importer Security Filing (ISF) comes in.
So, again… What does this have to do with cargo heading to Canada?
When do you need to file an Importer Security Filing?
There are 2 types of Importer Security Filings: ISF-10 and ISF-5. For a typical shipment arriving by vessel and being offloaded in the U.S., CBP requires an ISF-10 be filed. For shipments entering the port limits but not leaving Customs custody in the U.S., CBP requires an ISF-5 be filed.
When cargo is loaded onto a vessel in a foreign port, it may stop in several ports along the way to pick up or drop off other cargo. Cargo that is on a vessel that stops at one or more ports within the United States and does not leave the ship is called Foreign Cargo Remaining on Board or Freight Remaining on Board (FROB). Because FROB technically does enter the territory of the United States while at the port, CBP will need to know about it so that it can be screened for potential threats.
It is not uncommon for a vessel destined for Canada to stop at a port in the U.S. before reaching its’ destination. In these cases, the shipments are considered FROB and an ISF-5 will be required. So, let’s discuss what an ISF-5 includes.
What does an ISF-5 require?
U.S. Customs and Border Protection (CBP) began enforcing the ISF-5 rule In March 2019 and the rule is now in full effect. An ISF-5 requires providing the 5 following data elements:
- Booking Party
- Foreign Port of Unlading
- Place of Delivery
- Ship to Party
- Harmonized Schedule Commodity Code (6-digit level)
Failing to file the ISF-5 at least 24 hours before loading the vessel headed to the United States can result in delays and fines (starting at $5,000 per instance and up to $10,000 for multiple offences within a shipment).
Who is responsible for filing ISFs?
Before you panic and start asking questions like, “how will I know if my shipment is on hold?” or “what do I need to do to ensure my imported goods are not at risk of a penalty because of a missing Importer Security Filing?”, take a deep breath and let us look at the language used in the U.S. federal regulations to understand who exactly is responsible for filing an ISF.
§149.2(a) Importer Security Filing Requirements:
“For cargo arriving by vessel, with the exception of any bulk cargo pursuant to §149.4(a) of this part, the ISF Importer, as defined in §149.1 of this part, or authorized agent (see §149.5 of this part) must submit in English the Importer Security Filing elements prescribed in §149.3 of this part within the time specified in paragraph (b) of this section via a CBP-approved electronic interchange system.”
Essentially, this means that the Importer Security Filing Importer is required to file an Importer Security Filing with the required data elements within the required timeframe.
And who is the Importer Security Filing Importer?
§149.1 (a) Importer Security Filing Importer:
“For the purposes of this part, Importer Security Filing (ISF) Importer means the party causing goods to arrive within the limits of a port in the United States by vessel. For shipments other than foreign cargo remaining on board (FROB), the ISF Importer will be the goods’ owner, purchaser, consignee, or agent such as a license customs broker. For FROB cargo, the ISF Importer will be the carrier or the non-vessel operating common carrier.”
So, there it is in black and white. The responsible party for filing the Importer Security Filing for an FROB shipment is the carrier or the non-vessel operating common carrier.
As a Canadian importer, why should I care?
As with most things, knowledge is power and can help protect your business from potential penalties, costly delays, and overall anguish. To explain why this information might be useful, here are a couple of scenarios that pop up from time to time:
You are going through the documentation you received for a shipment heading to Canada and notice you have emails that include Importer Security Filing information. Your vendor or freight forwarder mentions that you need to make sure that you file an ISF. You might think to yourself, “Well that’s silly… this shipment is going to Canada, so there’s no need to worry about that!” Or, armed with what you have just learned, you might push back to your contact and explain that if the shipment is being routed through the United States prior to arrival in Canada, the carrier or non-vessel operating common carrier (NVOCC) needs to ensure an ISF-5 is filed. You can always send them the above information in parts §149.1(a) and §149.2(a) to add some backup in case they have questions. That takes care of that!
Say instead of helping to educate your fellow partner in trade, you decide that it’s not your responsibility (and so you ignore the call to action to get an Importer Security Filing for your shipment). What if everyone assumed that someone else was going to handle it and your shipment arrives at a United States port without an ISF on file? Even though you are not the responsible party, you might start receiving notices about “No ISF on file” or “ISF hold”. Panic and finger-pointing ensue.
Scenario 2 Rabbit Hole:
In this situation, you might start to feel pressured to file an Importer Security Filing because your freight forwarder is pointing the finger at you. You forget what you’ve learned and want to get the cargo moving, so you start looking into how to file an ISF. You call a broker in the U.S. and, unfortunately, it isn’t GHY. They don’t insist that it should be the NVOCC or carrier filing the ISF and agree to file one on your behalf. They might talk to you about things like:
- Requiring a Power of Attorney
- Getting you set up with an importer number ($$$)
- Getting a bond which will be difficult to get because the Importer Security Filing is already late ($$$)
- Paying an ISF filing fee ($$$)
- Paying a penalty because the ISF is already late ($$$)
You not only added a few grey hairs to your head, but you’ve also spent a pretty penny to get your Importer Security Filing done AND risked having your company receive a penalty for filing it late.
Conclusion: You’re in the Know
Now that you’re armed with everything you need to know about Importer Security Filing, you can smile to yourself knowing that that’s a rabbit hole you’ll be staying clear of.
As with most things having to do with international trade, it’s best to align yourself with trade partners that understand the value of knowledge and are willing to share it. Moreover, working with the right vendors, freight forwarders, and customs broker can empower you to trade with confidence and avoid unnecessary Importer Security Filing rabbit holes.
Where can I find out more about Importer Security Filing?
Want more details about Importer Security Filing (ISF)? You can reach out to one of our Global Trade Experts or check out these links to official government resources: