On December 19, 2022, Canada announced that it has started the process to seize and pursue the forfeiture of assets of a sanctioned individual. The first target of Canada’s new seizure and forfeiture powers, which came into force on June 23, 2022 following amendments to the Special Economic Measures Act (“SEMA”) under the Budget Bill, is Granite Capital Holdings Ltd., a company owned or that is held or controlled, directly or indirectly, by Roman Abramovich. Mr. Abramovich was sanctioned under the Special Economic Measures (Russia) Regulations on March 10, 2022. As outlined in the press release, the Minister of Foreign Affairs announced that “Canada will seize and pursue the forfeiture of US $26 million” from the company.
The announcement comes after the Governor in Council issued an Order for the restraint of property situated in Canada on December 15, 2022 pursuant to paragraph 4(1)(b) and subsection 4(1.1) of the SEMA. Paragraph 4(1)(b) of the SEMA permits the Governor in Council to “by order, cause to be seized or restrained … any property situated in Canada that is owned – or that is held or controlled, directly or indirectly – by (i) a foreign state, (ii) any person in that foreign state, or (iii) a national of that foreign state who does not ordinarily reside in Canada”.
The next step in pursuing the seizure of the assets is for Minister Joly to consider an application to the court for the forfeiture of the asset permanently to the Crown. Bill C-19, which came into force on June 23, 2022, amended the SEMA to permit the Minister of Foreign Affairs to apply to the Court for an order forfeiting the property to His Majesty in right of Canada. Applications must be made to a superior court judge of the same province where property described in an order made under 4(1)(b) of the SEMA is situated.
Under subsection 5.4(1) of the SEMA, the superior court judge must order the forfeiture of the property if they determine (a) that the property described in the Minister’s application is the same property described in the order made under 4(1)(b); and (b) that the property described in the order made under 4(1)(b) is held or controlled, directly or indirectly, by the foreign national specified in the order made under 4(1)(b).
If the assets are forfeited, Canada announced that the proceeds will be used “for the reconstruction of Ukraine and compensation to victims of the Putin regime’s illegal and unjustifiable invasion”. This is the first time Canada is using its powers to pursue seizure of the assets of a sanctioned individual, and Canada is the first G7 country to implement these types of measures.
Our team will continue to closely monitor the sanctions measures related to Russia, providing updates to keep clients informed about important developments affecting trade and services. We have significant experience in the design and implementation of sanctions-related compliance programs and internal investigations. Where breaches are identified, we work closely with clients in making voluntary disclosures and in engaging with the ensuing investigations conducted by the RCMP and Global Affairs Canada. We also regularly assist clients with the application for delisting process as well as applications for exemption permits, including under the Special Economic Measures (Russia) Permit Authorization Order.