On April 19, 2022, Canada further amended the Special Economic Measures (Russia) Regulations to list an additional 14 individuals, including President Putin’s alleged daughters, Katerina Vladimirovna Tikhonova and Maria Vladimirovna Vorontsova. This takes the number of “designated persons” under the Regulations up to a total of 743. According to Global Affairs Canada, additions to the list of designated persons schedule are “close associates of the Russian regime, including Russian oligarchs and their family members, who were sanctioned for their complicity in Russia’s unjustifiable invasion of Ukraine.”
By way of summary of the current prohibitions, Canada has according to Global Affairs Canada imposed sanctions related to Russia under the under the Special Economic Measures Act in order to “respond to the gravity of Russia’s violation of the sovereignty and territorial integrity of Ukraine, and grave human rights violations that have been committed in Russia.”
The Special Economic Measures (Russia) Regulations (“the Regulations”) first came into force on March 17, 2014, in relation to activity related to Crimea. The Regulations have undergone a flurry of recent amendments relating to Russia’s invasion into Ukraine, namely on March 19, March 21, April 28, May 4, May 12, June 21, July 24, August 6, September 16, December 19, 2014, February 17 and June 29, 2015, March 18, 2016, March 4 and 15, 2019, March 21 and 29, 2021, February 24 and 28, March 4, 6, 10, 14, 23, and 24, April 5, 8, and 19 2022.
The Regulations impose an asset freeze and dealings prohibition on “designated persons” which include individuals and entities. It is prohibited for any person in Canada and any Canadian outside Canada to:
- deal in any property, wherever situated, held by or on behalf of a designated person whose name is listed in Schedule 1
- enter into or facilitate, directly or indirectly, any transaction related to such a dealing
- provide any financial or other related services in respect of such a dealing
- make any goods, wherever situated, available to a designated person listed in Schedule 1
- provide any financial or related service to, or for the benefit of, a designated person listed in Schedule 1
The individuals listed in Part 1.1 of Schedule 1 to the Regulations are also barred by Canada under the Immigration and Refugee Protection Act.
The Regulations also:
- impose restrictions on a number of specific sectors, including the financial and energy sectors
- prohibit any person in Canada and Canadians abroad from dealing in new debt of longer than 30 days maturity in relation to persons listed in Schedule 2-, or 90-days maturity in relation to persons listed in Schedule 3
- prohibit any person in Canada or Canadians abroad from dealing in new securities in relation to persons listed in Schedule 2
- prohibit any ship that is registered in Russia or used, leased, or chartered, in whole or in part, by or on behalf of or for the benefit of Russia, a person in Russia or a designated person from docking in Canada or passing through Canadian waters
- prohibit the export, sale, supply, or shipping of goods listed in Schedule 4, to Russia or to any person in Russia for their use in offshore oil (depth greater than 500m), shale oil or Arctic oil exploration and production. This includes a ban on the provision of any financial, technical, or other services
- prohibit the import, purchase, or acquisition by any person in Canada and any Canadian outside Canada, of specific petroleum products listed in Schedule 5, from Russia or from any person in Russia
- prohibit any person in Canada and any Canadian outside Canada from exporting, selling, supplying or shipping any good, wherever situated, or to provide any technology, to Russia or to any person in Russia, if it is described in the Restricted Goods and Technologies List
- prohibit individuals and entities in Canada from providing any and all insurance, reinsurance, and underwriting services for aircraft, and aviation and aerospace products either owned by, controlled by, registered to, chartered by, or operated by entities and individuals resident, incorporated, or domiciled in Russia.
- prohibit “causing, assisting or promoting prohibited activities”
The Regulations provide a review mechanism to remove names from the “designated person” Schedule through an Application to the Minister of Global Affairs Canada. Under that Application mechanism, the Minister is required to provide a written decision within 90 days.
As well, the Regulations provide exceptions to the asset freeze and dealings prohibition on “designated persons.” Those include:
- payments made by or on behalf of designated persons pursuant to contracts entered into prior to the coming into force of the Regulations, provided that the payments are not made to or for the benefit of a designated person
- pension payments to any person in Canada or any Canadian outside Canada
- transactions in respect of accounts at financial institutions held by diplomatic missions, provided that the transaction is required in order for the mission to fulfill its diplomatic functions under the Vienna Convention on Diplomatic Relations, or transactions required in order to maintain the mission premises if the diplomatic mission has been temporarily or permanently recalled
- transactions by international organizations with diplomatic status, agencies of the United Nations, the International Red Cross and Red Crescent Movement, or Canadian non-governmental organizations that have entered into a grant or contribution agreement with Foreign Affairs, Trade and Development Canada
- transactions necessary for a Canadian to transfer to a non-designated person any accounts, funds, or investments of a Canadian held by a designated person on the day on which that person became designated
- financial services required in order for a designated person to obtain legal services in Canada with respect to the application to the Minister of Foreign Affairs of any of the prohibitions in the Regulations
- loan repayments made to any person in Canada or any Canadian abroad in respect of loans entered into before the coming into force of the Regulations, enforcement of security in respect of those loans, or payments by guarantors guaranteeing those loans
It is also worth note that the Special Economic Measures (Russia) Permit Authorization Order, made pursuant to subsection 4(4) of the Special Economic Measures Act, authorizes the Minister of Foreign Affairs to issue to any person in Canada or any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, that is otherwise restricted/prohibited.
Our team will continue to monitor the sanctions measures related to Russia, Belarus, and Ukraine, providing updates that may impact Canadian business operations. The lawyers at Tereposky & DeRose LLP have significant experience in assisting clients with navigating the parameters of sanctions as well as the design and implementation of sanctions-related compliance programs, including policies, procedures, employee training, and internal control mechanisms. They also regularly assist both Canadian and international businesses, financial institutions, and individuals with internal investigations when “red flags” appear and provide advice on compliance in these areas. Where breaches have occurred, they have worked closely with their 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.