Financial Security (Electronic Means) Regulations: SOR/2024-42
Canada Gazette, Part II, Volume 158, Number 6
Registration
SOR/2024-42 March 1, 2024
CUSTOMS ACT
P.C. 2024-194 March 1, 2024
Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Safety and Emergency Preparedness, makes the annexed Financial Security (Electronic Means) Regulations under paragraph 8.6(1)(a)footnote a and subsection 166(1)footnote b of the Customs Act footnote c.
Financial Security (Electronic Means) Regulations
Definitions and Application
Definitions
1 The following definitions apply in these Regulations.
- Act
- means the Customs Act. (Loi)
- debtor
- means a person who gives security under the Act or the Customs Tariff. (débiteur)
- security agreement
- means an agreement between a debtor and a security provider under which the security provider guarantees payment of an amount that the debtor owes under the Act or the Customs Tariff. (contrat de garantie)
- security provider
- means a person who guarantees payment of amounts that a debtor owes under the Act or the Customs Tariff. (fournisseur de garantie)
Application
2 These Regulations apply to security that is required under the Act or the Customs Tariff.
Security
Nature of security
3 For the purposes of paragraph 166(1)(b) of the Act, security that is required to be given must be a deposit or a written security agreement.
Security agreement — deemed terms and conditions
4 (1) The following terms and conditions are deemed to be an integral part of every security agreement and take precedence in the case of any conflict or inconsistency with any other provision of the security agreement:
- (a) the debtor and the security provider represent and warrant that the security agreement constitutes a valid and legally binding obligation; and
- (b) if the debtor has failed to pay an amount that the debtor owes under the Act or the Customs Tariff by the day on which it is payable, the security provider must pay to His Majesty in right of Canada, in accordance with section 9, the lesser of the amount that the debtor owes, subject to the limit set out in subsection 8(5), and the amount of the security entered or confirmed by the security provider under paragraph 5(2)(e).
Security provider
(2) The security provider that is a party to a security agreement must be one of the following:
- (a) a company or society that, by an order of the Superintendent of Financial Institutions made under subsection 53(1) of the Insurance Companies Act, is approved to commence and carry on the fidelity or surety class of insurance business in Canada;
- (b) an entity that is licensed or otherwise authorized under the laws of a province to carry on the fidelity or surety class of insurance business in that province;
- (c) a member of the Canadian Payments Association referred to in section 4 of the Canadian Payments Act;
- (d) a corporation that accepts deposits insured by the Canada Deposit Insurance Corporation or the Autorité des marchés financiers to the maximum permitted by the statutes under which those institutions were established;
- (e) a credit union as defined in subsection 137(6) of the Income Tax Act;
- (f) a corporation that accepts deposits from the public, if repayment of the deposits is guaranteed by His Majesty in right of a province.
Electronic means
5 (1) Subject to subsection (3), all security must be given by means of the electronic system specified by the Minister.
Security agreement — information
(2) In the case of a security agreement, the security is given when the security provider enters or confirms the following information by means of the electronic system:
- (a) a number or any other identifier for the agreement;
- (b) the names of the parties;
- (c) the relevant Agency program;
- (d) the applicable business number;
- (e) the amount of the security;
- (f) the legislative authority under which the security is given; and
- (g) the validity period of the agreement.
Exceptions
(3) The Minister may require that security be given by any other means that is made available or specified by the Minister for that purpose if the Minister determines that
- (a) the infrastructure is inadequate or incompatible with the electronic system specified by the Minister;
- (b) a natural disaster, national crisis or any other exceptional circumstance prevents or impedes the use of the electronic system or makes using it unreliable; or
- (c) it is impracticable for a debtor, due to circumstances beyond their control, to give security by means of the electronic system.
Copy of security agreement
6 On the Minister’s request, a debtor or security provider must provide a copy of the security agreement to the Minister by means of the electronic system specified by the Minister.
Termination of security agreement
7 If a security agreement is to be terminated, the security provider must notify the Minister of the termination date by means of the electronic system specified by the Minister at least 30 days before that date.
Payment of security
8 (1) Subject to subsections (3) to (5), the Minister may demand that the security provider pay the security given in accordance with subsection 5(2) if the debtor has failed to pay an amount that the debtor owes under the Act or the Customs Tariff by the day on which it is payable.
Demand
(2) The demand must be sent to the security provider in writing and contain the following information:
- (a) the amount of the payment demanded; and
- (b) the information that the security provider entered or confirmed under subsection 5(2).
Limitation period or prescription
(3) In the case of a security agreement that has expired or been terminated, a demand under subsection (1) may only be made within one year after the day on which the security agreement expired or was terminated.
Amount
(4) The demand must be for an amount equal to the lesser of
- (a) the amount that the debtor owes under the Act or the Customs Tariff, and
- (b) the amount of the security entered or confirmed by the security provider under paragraph 5(2)(e).
Limit — amount
(5) For the purposes of paragraph (4)(a), the amount that the debtor owes includes only those amounts that have accrued to the debtor under the Act or the Customs Tariff during the validity period referred to in paragraph 5(2)(g) and that are payable.
Payment by security provider
9 (1) Within 60 days after the day on which a demand is sent to a security provider under subsection 8(2), the security provider must
- (a) pay to His Majesty in right of Canada the amount referred to in paragraph 8(2)(a); or
- (b) provide the Minister with information to rebut the demand.
Determination by Minister
(2) If the security provider provides information under paragraph (1)(b), the Minister must review the information, determine whether to continue with, amend or withdraw the demand and must send the security provider notice of that determination.
Payment after determination
(3) If the notice referred to in subsection (2) indicates that an amount must be paid, the security provider must pay that amount to His Majesty in right of Canada on the day on which the notice is received.
Disputes — security provider and debtor
(4) For greater certainty, a security provider is required to make a payment to His Majesty in right of Canada under this section despite any dispute between the security provider and the debtor with respect to any matter related to the security or the security agreement.
Other amounts owed
10 For greater certainty, the payment of an amount by a security provider to His Majesty in right of Canada under paragraph 9(1)(a) or subsection 9(3) does not relieve the debtor or any other person from liability to pay any amount otherwise owed.
Transitional Provision
Continuation of security
11 These Regulations do not apply to security, other than security given under the Accounting for Imported Goods and Payment of Duties Regulations, that has been given under the Act or the Customs Tariff and that is valid immediately before the day on which these Regulations come into force. The security continues to be valid until the day on which it expires or is terminated.
Coming into Force
S.C. 2022, c. 10
12 These Regulations come into force at 3:00:01 a.m. Eastern Daylight time on the first day on which both sections 304 and 330 of the Budget Implementation Act, 2022, No. 1, chapter 10 of the Statutes of Canada 2022, are in force, but if they are registered after that day, they come into force at 3:00:01 a.m. Eastern Daylight time on the day after the day on which they are registered.
N.B. The Regulatory Impact Analysis Statement for these Regulations appears following SOR/2024-41, Regulations Amending Certain Regulations Administered and Enforced by the Canada Border Services Agency.