HMFSA2150 - General information: What are the purposes of financial security for movement guarantees?

Financial security for intra-EU movements of duty suspended excise goods is a mandatory requirement under Article 15(3) of Council Directive 92/12/EEC.

The main purpose of the movement security is to identify the Principal (i.e. the person named on the guarantee) as one of the parties liable to pay the duty if an irregularity occurs during a duty suspended movement. The Principal’s liability is not restricted to the amount stated in the guarantee. The amount stated in the guarantee is merely the limit of the liability of the guarantor (i.e. the financial institution).

The financial security system should encourage warehouse keepers and others, to provide a guarantee for a particular movement only if they are in a position to ensure that the goods concerned arrive at their destination (i.e. they are in control of the transport arrangements).

Consequently, the assurance effort has to be directed at Principals to movement guarantees in order to keep track of their activities and to ensure that any irregularities are identified, before they escalate and exceed the combined total of the guarantee cover and the Principal’s assets.

The financial security system is flexible enough to allow compliant traders to operate. It is not a tool to prevent diversion.