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Memorandum D1-8-1: Licensing of Customs Brokers

ISSN 2369-2391

Ottawa,

This document is also available in PDF (191 KB)

Plain language summary

Target audience: Licensed customs brokers and customs broker applicants

Key content: Outlines the procedures to be followed by an individual, partnership, or corporation applying for a customs broker licence and the conditions under which licensed customs brokers must operate

Keywords: CARM, customs broker, national licensing, accounting, payment, program

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Updates made to this D-memo

This memorandum has been revised to:

Definitions

“Act”
means the Customs Act.
“Applicant”
means a person who applies for a licence.
“CBSA Assessment and Revenue Management (CARM)”
is a duty and tax collection system developed to modernize and streamline the process of importing goods into Canada.
“CARM Client Portal (CCP)”
serves as the primary hub for trade chain partners to interact with the CBSA relating to the importation of goods into Canada.
“Licence”
means a licence to operate a place as a customs broker as provided for in section 9 of the Customs Act.
“Licensee”
means a person to whom a customs broker licence has been issued.

Guidelines

1. A customs broker is an individual, partnership, or corporation that acts as an agent to transact business with the Canada Border Services Agency (CBSA) on behalf of the owner or importer of goods.

2. While for most purposes, any agent may represent a client when transacting business with the CBSA, only a licensed customs broker may account for goods and pay duties under section 32 of the Customs Act as the agent of the owner or importer of the goods.

3. Customs broker licences are issued under Section 9 of the Customs Act. The requirements to obtain and hold a customs broker licence are detailed in the Customs Brokers Licensing Regulations, hereinafter referred to as the Regulations.

Qualifications

General

4. A customs broker licence can be granted to an individual, a corporation, or a partnership of individuals or corporations.

5. An individual applying for a custom broker licence has to be a citizen or permanent resident of Canada who is of good character, who is at least 18 years of age, who has the financial resources to conduct business in a responsible manner; and who has sufficient knowledge relating to imports and exports.

6. A corporation applying for a customs broker licence has to be incorporated in Canada, and a majority of directors have to be citizens or permanent residents of Canada. The corporation and all directors are to be of good character. The corporation has to have the financial resources to conduct business in a responsible manner, and at least one officer of the corporation has to be a qualified officer, as defined in the subsequent section “Qualified Officer”, and have sufficient knowledge relating to imports and exports.

7. In a partnership of individuals applying for a customs broker licence, each individual has to be a citizen or permanent resident of Canada who is of good character and who is at least 18 years of age. The partnership has to have the financial resources to conduct business in a responsible manner, and at least one partner has to be a qualified officer and have sufficient knowledge relating to imports and exports.

8. In a partnership composed of corporations applying for a customs broker licence, all corporations have to be incorporated in Canada with a majority of directors who are citizens or permanent residents of Canada. All corporations and all directors have to be of good character. All corporations have to have the financial resources to conduct business in a responsible manner. At least one officer of at least one of the corporations has to be a qualified officer and have sufficient knowledge relating to imports and exports.

9. All of the aforementioned reflects the requirements to be met in section 3 of the Regulations.

Qualified Officer

10. Any individual or organization operating as a customs broker, whether a sole proprietorship, a corporation, or a partnership of individuals or corporations, has to have a qualified officer. If the licence is granted to a corporation or a partnership of corporations, the qualified officer has to be a partner, a director or an officer of the corporation. If the licence is granted to a partnership of individuals, the qualified officer has to be one of the partners. If the licence is granted to a sole proprietorship, the qualified officer has to be the owner of the unincorporated business granted the licence.

11. Individuals who are not an employee of a brokerage firm and wish to apply for a customs broker licence have twelve months from the date of the exam to submit an application.

12. The qualified officer is an individual who:

a) has written and attained a grade of at least 60 per cent on the Customs Brokers Professional Examination which meets the requirement of sufficient knowledge relating to imports and exports set out in section 4 of the Regulations;

b) has been appointed in the position as the qualified officer; and,

c) may only work for one customs broker at a time.

13. For individuals to continue to meet the knowledge requirement of the Regulations, they have to be a partner, a director, or an employee of a licensed customs broker. If there is a break in service, the individual may no longer be eligible.

Loss of Status

14. To remain eligible as a qualified officer, individuals have to work in the customs brokerage industry as a qualified officer or as an employee of a licensed customs broker. The maximum length of a break in service depends on when the break occurred:

(a) if the break in service occurred prior to November 1986, any length is acceptable;

(b) if the break in service occurred between November 1986 and April 2002, it cannot exceed six months; and,

(c) if the break in service occurred after April 2002, it cannot exceed twelve months.

15. If an individual has forfeited eligibility due to a break in service, their status may be reacquired through successful completion of the Customs Broker's Professional Examination. For more information on the exam, please see Memorandum D1-8-3, Canada Border Services Agency Customs Brokers Professional Examination.

Absence of a Designated Qualified Officer

16. While it is not a licensing requirement that a qualified officer work full time, there should always be someone available as a replacement (i.e., Director) in their absence.

17. Absence of the designated qualified officer from a brokerage firm will be permitted in the following circumstances:

a) For planned absences, such as vacation or maternity leave, the qualified officer may be absent for a period of up to four (4) weeks provided that a temporary replacement is appointed. Where such a replacement cannot be obtained, the Commercial Registration Unit (HQ) may approve an absence under the following conditions:

(i) an acceptable explanation is submitted;

(ii) the remaining staff in the broker's office are capable of dealing with the ongoing work; and,

(iii) appropriate arrangements are made so that if a client of the broker is in need of advice, the qualified officer can be contacted.

b) For unplanned absences, such as sudden illness or abrupt termination, with the permission of the Commercial Registration Unit (HQ), the office may operate without a designated qualified officer for a period up to ninety (90) calendar days. If the qualified officer has not been replaced at that time, the licence is subject to cancellation.

Licensing Procedures

Application

18. Prior to the application of a customs broker licence, an applicant must first have a CARM client portal (CCP) user account. Once a CCP account has been created, the applicant can select the option to enroll in the Customs Broker program.

19. To submit a customs broker application, an applicant must download and complete the program enrolment form found on the CCP, obtain all required additional documentation, and upload and submit all components to the CCP. If the application submission is incomplete, the applicant will be notified, at which point the application can be amended to provide the missing information.

20. A complete application package includes:

(a) a completed application Form L53;

(b) a copy of the qualified officer certificate of qualification;

(c) a completed Form L60, Customs Brokers Questionnaire, for the qualified officer and all partners and directors;

(i) A certified criminal record check with fingerprinting from your local police station or police force of jurisdiction or an RCMP certified third party must be included with each L60 form for each qualified officer and all partners and directors

(d) an attestation signed / affirmed by the qualified officer attesting that the broker’s business office meets regulatory requirements for signage, maintenance of independent books and records and that they will prominently display their broker licence or a copy thereof as soon as received. The CBSA reserves the right to perform a site inspection to ensure regulatory requirements are met. This attestation is signed/affirmed in Box 72 of the CARM enrolment form.

(e) a copy of proof of Canadian citizenship or permanent residency of Canada for qualified officers and of directors;

(f) articles of incorporation (except in the case of sole proprietorship) as outlined in s. 23 of this D-Memo; and,

(g) upon successful completion and submission of the application;

i) payment of the Customs Broker Licence fee (for the current fiscal year’s fee, please consult the website: Licensed customs brokers);

ii) security in the amount of CAD $50,000.

Note: All fees for records checks and/or fingerprints are the responsibility of the applicant(s).

Note: All partners and directors who are not Canadian citizens or permanent residents must still provide a certified criminal record check with fingerprinting. Instruction for certified criminal record checks with fingerprinting outside Canada that is certified by the RCMP can be found on the RCMP website.

Note: All certified criminal record checks are valid for 6 months after issuance.

21. Once a complete application is approved, an invoice for the Customs Broker Licence fee is generated and posted to the applicant’s RM account in the CCP. The applicant must then post the required financial security and pay the Customs Broker Licence fee.

Citizenship

22. As qualified officers and the majority of directors have to be Canadian citizens or permanent residents of Canada, proof of citizenship is required. For licensing purposes, acceptable proof would be a copy of one of the following:

Canadian Citizens

(a) birth certificate from a Canadian province or territory (issued under the Vital Statistics Act);

(b) Canadian certificate of registration of birth abroad;

(c) certified statement of live birth from a Canadian province or territory;

(d) certificate of Canadian citizenship or certificate of naturalization (paper document or card, not commemorative issue);

(e) certificate of Indian status (paper or plastic card);

(f) registered Indian record (certified); or,

(g) valid Canadian passport or Canadian passport expired for less than 5 months.

Permanent Residents

(a) Canadian immigration identification card;

(b) confirmation of permanent residence (IMM 5292, 5688);

(c) valid permanent resident card or a permanent resident card expired for less than 5 months; or,

(d) record of landing (IMM 1000).

23. If the applicant is a corporation or a partnership of corporations, the following documentation also has to be provided upon submission of the application package:

(a) a copy of the certificate of registration or incorporation for each corporation, proving that the firm is registered in Canada; and,

(b) a resolution of the board of directors appointing the qualified officer and any Directors as an officer of the corporation. If the applicant is a partnership of corporations, this is required for only one of the partners.

24. The applicant may be requested to provide information, such as financial statements, to demonstrate sufficient financial resources to conduct business in a responsible manner. This information does not have to be submitted with the application, but may be requested at any time during the licensing process.

25. The completed application package, signed by the qualified officer, is to be submitted on the CCP. Acceptable forms of e-signature include scanned handwritten signatures, signatures from a pdf software’s “sign” function, or a local digital certificate signature.

Security

26. A security deposit in the amount of CAD $50,000 is to be provided via the CCP in the final stages of the application. The CAD $50,000 security deposit is to protect the CBSA against loss while the licence is in effect. The CCP must be used to electronically post financial security. Memorandum D1-7-1, Posting Security for Transacting Bonded Operations outlines and explains general policies and procedures relating to the posting of security for participating in CBSA bonded transactions.

27. Financial security is accepted in CARM via one (1) of three (3) methods:

(a) The applicant submits a non-cash bond via the CCP, and their surety provider accepts it;

(b) The applicant makes a cash security request in the CCP;

(c) The applicant's surety provider sends the non-cash bond via an Application Programming Interface (API) on behalf of the applicant and the bond is automatically accepted in CARM.

For more information on CARM financial security please refer to CARM R2 Playbook section 14.0 Financial Security.

Processing of Applications

28. Once an application package is complete, meaning that all the requirements of the Regulations are met, the application process takes approximately three months from the date of submission to the approval of a licence.

29. A departmental investigation will be conducted on the qualified officers, directors, and partners to establish the good character requirement. This investigation will examine criminal records, CBSA compliance history, credit history and personal and work references. The information provided on Form L60 will be used in this investigation along with the examination of a certified criminal record check with fingerprinting. All certified criminal record checks are valid for 6 months after issuance.

Approval of Application

30. Upon the approval of the application, the applicant will be notified on the CCP of the results and will be granted an RM, a Customs Broker Licence number, and a transaction control number. A Customs Broker's Licence certificate will be provided to the applicant in the CCP as a downloadable PDF document.

Rejection of Application

31. Should it be determined that any of the requirements of the Regulations have not been satisfied, the applicant will be informed through the CCP that the application has been rejected, specifying the unfulfilled requirement(s). The applicant may resubmit the application with new or additional information.

Licence Fees

32. The annual fee for a customs broker licence is updated annually as issued under the Service Fees Act. Current fiscal year’s rates can be found by consulting the website Licensed customs brokers.

33. The licence fee is nonrefundable once an application has been processed; as well, fees will not be refunded when a customs broker ceases operations prior to the end of the licensing period.

Licence Renewal

34. In accordance with sections 11 and 12 of the Regulations, a “Customs Broker Licence Renewal Fee Invoice” will be issued to all licensed customs brokers annually through the CCP. A licence, including a licence that has been renewed, expires on the 31st day of March in accordance with section 12 of the Regulations.

35. Payment of the invoice is to be made on the CCP. The CBSA will issue Form K23, Miscellaneous invoice, through the CCP for the fee, at which point the renewal fee can be paid via the CCP.

Conduct of Business

Licence Authorization

36. A successful application for a customs broker licence authorizes the holder to transact business as a customs broker at any CBSA commercial office in Canada.

Business Office

37. The business office where business is transacted as a customs broker is to maintain or have access to independent files and records.

38. Every customs broker shall display prominently their customs broker licence or a copy thereof, in the office where they transact business as a customs broker.

39. Where the customs broker is a partnership or a corporation, the customs broker shall display a sign bearing the name under which the customs broker is authorized to transact business.

40. While the requirement for a CBSA site inspection has been eliminated, the CBSA reserves the right to perform a site inspection to ensure regulatory requirements are met. The qualified officer will be required to attest that these requirements have been met on the application for a broker licence.

Importer Receipts

41. Subsection 14(c) and (d) of the Regulations requires customs brokers to provide their clients with copies of the accounting documents submitted on their behalf. Where the broker is an EDI (electronic data interchange) participant and copies of accounting documents bearing the customs accounting number and official customs stamp are not available, the customs broker will provide to the importer a receipt which reports the following details of the transaction:

(a) the customs transaction number, including line number where applicable;

(b) a description of goods;

(c) the value and tariff code of each item;

(d) the exchange rate;

(e) the rates of duties and taxes; and,

(f) the amount of duties and taxes paid or refunded.

Records

42. The methods and procedures outlined in Memorandum D17-1-21, Maintenance of Records in Canada by Importers, also apply to those records to be kept by customs brokers pursuant to subsection 17(1) of the Regulations.

Surrender of Licence

43. When a customs broker's licence is cancelled or when the broker has ceased to transact business as a customs broker, the licence is to be removed from display in the broker’s business location.

Licence Changes

Notification of Changes

44. Customs brokers are required to notify the CBSA of any changes affecting the validity of a licence. Such changes include, but are not limited to, changes in ownership, name changes, changes to the directors and officers of a corporation, the departure of a qualified officer, or the relocation of a business office. Any such changes require the submission of updated forms and additional documentation to be uploaded directly to the CCP, as is indicated in the following sections for each respective change.

45. Failure to report changes to the CBSA may result in the application of penalties under the Administrative Monetary Penalties System (AMPS).

46. If a change to a licence results in that customs broker no longer meeting the requirements of the Regulations, or if the change requires that a new licence be issued, the CBSA shall immediately inform the customs broker in writing.

Change of Ownership

47. When the ownership of a customs broker changes, the existing licensee must advise the CBSA through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the following information in respect of the new ownership:

(a) the reason for the change in ownership;

(b) the effective date of the change;

(c) the names of any new directors (and proof of citizenship, where applicable) that may have joined as a result of the change; and,

(d) a completed Form L60 for each new appointee.

(e) a certified criminal record check with fingerprinting;

o All certified criminal record checks are valid for 6 months after issuance.

48. The CBSA will acknowledge the change of ownership through the CCP once any investigations have been completed.

49. The legal entity holding the licence prior to the change has to continue to exist after the change. If the original licence holder ceases to exist as a result of a change of ownership, a new licence application has to be made. For example, if another corporation purchases the assets of a licensed customs broker, and the first corporation is then dissolved, the licence is no longer valid. The purchasing corporation has to submit an application for a new licence.

50. In the case of sole proprietorships or partnerships of individuals, a change of ownership is not allowed as the licence is granted to the individual or partnership.

Amalgamation

51. When a customs broker structured as a corporation or a partnership of corporations undergoes an amalgamation, the CBSA is to be notified through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. During an amalgamation, the final legal entity which results from the amalgamation has to have existed and been licensed prior to the amalgamation. If the amalgamation results in a new or a previously unlicensed legal entity, a new application for a licence is to be submitted.

52. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the following information in respect of the amalgamation:

(a) a copy of amendments to the articles of incorporation reflecting the change;

(b) the effective date of the change;

(c) the names of any new directors or qualified officer (and proof of citizenship where applicable) that may have joined as a result of the change;

(d) a completed Form L60 for each new appointee; and,

(e) a certified criminal record check with fingerprinting;

o All certified criminal record checks are valid for 6 months after issuance;

(f) if security has been posted in the form of a non-cash bond or bond on the CCP, an endorsement to the bond is to be submitted to reflect the new structure.

53. The CBSA will acknowledge the amalgamation through the CCP once any investigations have been completed.

Change of Name

54. When the name of the licence holder is changed, the CBSA is to be notified through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the following information in respect of the new name:

(a) revised articles showing the new legal name;

(b) a list of current officers and directors;

(c) a completed Form L60 for each of the new directors; and,

(d) a certified criminal record check with fingerprinting;

o All certified criminal record checks are valid for 6 months after issuance;

(e) if security has been posted in the form of a non-cash bond or a D120, Customs Bond, an endorsement to the bond is to be submitted to reflect the new structure.

55. The CBSA will acknowledge the change of name through the CCP once any investigations have been completed. Upon acknowledgement of the change by the CBSA, a new licence will be issued and the customs broker can make the corresponding name change to their program account name on the CCP.

Change of Qualified Officer

56. When a customs broker that is a corporation, a partnership, or a partnership of corporations appoints a new qualified officer, the CBSA is to be notified through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the following information in respect of the new qualified officer:

(a) a copy of a resolution of the board of directors appointing the new qualified officer as an officer of the corporation;

(b) a completed Form L60 for the new qualified officer;

(c) Proof of citizenship / permanent resident status;

(d) Customs broker licensing exam certificate; and

(e) a certified criminal record check with fingerprinting;

o All certified criminal record checks are valid for 6 months after issuance.

57. An investigation will be conducted on the new qualified officer. If the new qualified officer meets the requirements of the Regulations, the customs broker will be informed via the CCP that the change has been accepted. If the new qualified officer does not meet the requirements, the customs broker will be informed via the CCP that the change has been rejected, specifying the unfulfilled requirement(s). The customs broker may request that the CBSA review the decision on the basis of new or additional information.

58. Customs brokers that are sole proprietorships may not change their qualified officer.

Change of Directors

59. When there are new directors, or individuals cease to be directors, the CBSA is to be notified through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the following information in respect of the new directors:

(a) a copy of a resolution of the board of directors appointing the new directors (and proof of citizenship where applicable) as directors of the corporation;

(b) a completed Form L60 for the new directors;

(c) a certified criminal record check with fingerprinting; and,

o All certified criminal record checks are valid for 6 months after issuance.

(d) the date the director ceases to be a director of the brokerage company.

60. The CBSA will acknowledge the change of directors through the CCP once any investigations have been completed.

Change of Partners

61. When a partner enters or leaves a licensed partnership or partnership of corporations, the CBSA is to be notified through the CCP as soon as possible prior to the effective date of the change. The existing licensee must notify the CBSA of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include, in respect of the new partner, a completed Form L60 for the new partner, including a certified criminal record check with fingerprinting, if the customs broker is a partnership of individuals, or for the directors of the corporation, if the customs broker is a partnership of corporations. All certified criminal record checks are valid for 6 months after issuance.

62. The CBSA will acknowledge the change of partners through the CCP once any investigations have been completed.

63. When a partner in a customs broker changes, the legal entity holding the licence prior to the change has to continue to exist after the change. If the original licence holder ceases to exist as a result of a change of partnership, a new licence application is to be made.

Change of Address

64. If the address of the business office where a customs broker is licensed changes, the CBSA must be notified by the licensee of the change as soon as possible prior to the effective date of the change. The notification is to be sent to Brokers_Licensing-Agrement_des_courtiers@cbsa-asfc.gc.ca and will include the new address and of the date the new office will be opened.

65. The CBSA will acknowledge the change of address and upon acknowledgement of the change by the CBSA, the customs broker can make the corresponding address change to their program address on the CCP.

Suspension or Cancellation

66. The Minister, or a person designated by the Minister, may suspend or cancel a customs broker's licence if the license holder has failed to comply with the Regulations. Grounds for suspension or cancellation include:

(a) contravening an Act of Parliament or a Regulation related to the import or export of goods;

(b) fraud or attempted fraud;

(c) evading, attempting to evade, or suggesting the evasion of duties and taxes;

(d) failure to comply with the Regulations;

(e) insolvency or bankruptcy;

(f) dishonest conduct as a customs broker;

(g) failure to carry out the duties and responsibilities of a customs broker in a competent manner;

(h) ceasing to transact business as a customs broker; and,

(i) no longer being qualified under the Regulations.

67. When a licence is suspended by the Minister, the CBSA will immediately advise the licensee of the suspension and provide all relevant information concerning the grounds for the suspension. The licensee will have 30 days to provide information as to why the licence should be reinstated. This information should be provided through the CCP as indicated on CBSA’s suspension letter.

68. In cases where the licensee must take corrective action, the proposed suspension will be withdrawn when the CBSA is satisfied that the reasons for the suspension have been resolved. The licensee will be advised through the CCP when a suspended licence has been reinstated.

69. Before the Minister cancels a licence for the above reasons listed in section 66, the CBSA will advise the licensee by communications sent to the licensee 30 days prior to the intended date of cancellation. The CBSA will provide the licensee with all relevant information concerning the grounds for the cancellation. During the 30-day period, the licensee may provide information to the CBSA through the CCP as indicated in CBSA’s notice of cancellation explaining why the licence should not be cancelled. The CBSA will consider this information and the notice of cancellation will be withdrawn if the Minister is satisfied that the cause for the cancellation no longer exists.

70. Cancelled licences will not be reinstated. The holder of a licence that has been cancelled has to apply for a new licence and be granted a new licence in order to again conduct business as a customs broker.

71. Documentation concerning changes, cancellation and suspensions of licences should be submitted through the CCP.

Brokerage Fees

72. Fees charged for brokerage services constitute a private business transaction between the customs broker and the client. The CBSA does not intervene in fee disputes unless the client can demonstrate that the customs broker is in contravention of the Regulations by dishonest conduct, fraud or incompetence.

Additional Information

73. For more information, within Canada call the Border Information Service at 1-800-461-9999. From outside Canada call 204-983-3500 or 506-636-5064. Long distance charges will apply. Agents are available Monday to Friday (08:00 – 16:00 local time/except holidays). TTY is also available within Canada: 1-866-335-3237.

References

Applicable legislation

Related D memoranda

Superseded D memorandum

Issuing office

Regulatory Trade Programs Division
Trade and Anti-dumping Programs Directorate
Commercial and Trade Branch

Contact us

For more information, please contact the Commercial Registration Unit at Brokers_Licensing-Agrement_des_Courtiers@cbsa-asfc.gc.ca.

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