As 2026 brings new compliance challenges and opportunities, Baker McKenzie’s Canadian international trade team is here to help you stay ahead. We are launching our annual series of insights that unpack 2025’s biggest developments and spotlight the trade issues set to define 2026, bringing the clarity needed to navigate the evolving trade landscape.
This article focuses on Canada’s sanctions regime.
2025 represented another year of operational growth for Canada’s sanctions regulator – Global Affairs Canada’s Sanctions Bureau. Recognizing the continued need for growth into a regulatory role, a March 2025 internal evaluation recommended publication of comprehensive written guidance, improved efficiency in processing permit applications, and a department-led legislative review. The Sanctions Bureau spent the better part of 2025 tackling these recommendations; a years-long effort to publish comprehensive guidance on the application of Canadian sanctions laws culminated in new guidance published in November 2025. The Sanctions Bureau also launched a portal permitting delisting applications, requests for particulars, and certificates of mistaken identity to be filed online. Sanctions policy continued to expand, as the Government amended existing sanctions regimes, listing more individuals and entities, and expanding prohibitions under Canada’s Russia Regulations. The Government has also continued to build its civil sanctions enforcement capabilities through existing AML regulatory frameworks. In 2025, new property and sanctions circumvention reporting obligations entered into force under the Proceeds of Criminal, Money Laundering and Terrorist Financing Act (PCMLTFA). In Budget 2025, the Government reiterated its intention to establish the long-promised Financial Crimes Agency, which we expect will have some sanctions enforcement oversight. Finally, the first charges were laid against an individual accused of violating Canada’s Russia Regulations.
2026 promises more operational change for the Sanctions Bureau and the Canadian sanctions landscape. The Sanctions Bureau recently announced a merger with Global Affairs Canada’s Export Controls Directorate, bringing both policy and permitting departments under the same leadership. We expect greater operational efficiencies to be achieved where overlapping permitting requirements are present, and hopefully streamlined processes and service standards for permitting. Throughout 2026, we expect to see continued amendments to existing regulations enacted under the Special Economic Measures Act (SEMA), either ratcheting up existing regimes, or paring them back to respond to geopolitical developments. We also expect a number of delisting applications to be resolved, either resulting in delistings or further litigation before the federal courts challenging the Government’s underlying reasons for listing. Whether Canada will continue to exercise its secondary sanctions authority to list non-nationals under existing sanctions regimes remains to be seen. Without a doubt, we expect enforcement of (new) sanctions circumvention reporting obligations and importer/exporter reporting obligations under the PCMLTFA, and perhaps a remedy to dual property reporting required for certain entities subject to both the PCMLTFA and the SEMA. We await legislation to be tabled to stand up the Financial Crimes Agency promised for Spring 2026 after the Prime Minister recently tapped Rob Stewart, former Deputy Minister of International Trade, to lead its creation.
For businesses seeking to comply with Canadian sanctions laws, this means:
- Awareness of new reporting obligations under the PCMLTFA and building the requisite internal controls to escalate red flags and trigger reporting.
- Ensuring a business’ due diligence measures consider the new guidance issued by the Sanctions Bureau and existing guidance issued by the G7 regarding red flags for sanctions circumvention and the Common High Priority List.
- Following new designations and the expansion of the prohibitions in existing regulations enacted under the SEMA.
- Seeking permits to undertake activities otherwise prohibited by Canadian sanctions, while bracing for long wait times and the possibility that a permit application will be denied, or perhaps be irrelevant once issued.
- Following the development of the Financial Crimes Agency to better understand its mandate and enforcement functions.
- Following the ongoing prosecution under the Russia Regulations to understand how prosecutors develop the case to meet the necessary elements to show a violation of the SEMA.
- Watching for additional sanctions issued under the Government’s secondary sanctions authority and the policy reasons for exercising this authority.
Merger of export controls bureau and sanctions bureau at Global Affairs Canada
In February 2026, representatives from the Sanctions Bureau, announced that Global Affairs Canada’s Export Controls Bureau and Sanctions Bureau will merge into one department: The Sanctions and Export Controls Bureau. This marks a significant transformation for two departments that have historically operated independently. The merger seeks to leverage the Trade Controls Bureau’s operational and administrative tools to streamline the Sanctions Bureau’s permitting process. For example, by the end of 2026, sanctions permits will be submitted via NEXCOL. The changes to NEXCOL to provide for sanctions permitting should be available for testing by stakeholders in Fall 2026.
It remains to be seen whether the merger will result in the Sanctions Bureau adopting a streamlined approach to permit approvals, or whether legislative change is required to achieve real success here recognizing that permits require Ministerial approval under the SEMA’s Permit Authorization Order. Where natural synergies exist where applicants seek both export and sanctions permits; more often than not, sanctions permit requests require a distinct geopolitical and economic analysis than the non-proliferation concerns attached to export permitting.
New sanctions guidance
The Sanctions Bureau recently released the first formal guidance (Guidance) on compliance with and enforcement of Canada’s economic sanctions regime. This Guidance was issued alongside further updates to GAC’s Frequently Asked Questions. While the Canadian business community has long awaited formal guidance, many interpretive issues remain unresolved. We write about it here.
The guidance emphasizes due diligence best practices, providing two helpful case studies to illustrate the Sanction Bureau’s expectations, including the necessity of not only screening third parties, but considering beneficial ownership and senior leadership and obtaining independent legal advice prior to engaging in transactions. While persons are encouraged to report sanctions non-compliance to the Royal Canadian Mounted Police (RCMP), there is no positive obligation to report violations under the SEMA.
The Sanctions Bureau has promised that the guidance will continue to develop throughout 2026, with additional sector-specific guidance and further guidance on the application of Canada’s deeming provision.
Expanding designations, prohibitions and secondary sanctions
The list of individuals and entities designated under Canada’s unilateral sanctions legislation continues to grow. Regulations are not subject to the Parliamentary legislative process and are enacted and amended by way of an Order in Council. Regulations continue to be enacted overnight, with little notice and come into force prior to being announced to the general public. The Government will continue to update its existing sanctions regulations to apply pressure on target states.
In 2025 and to date in 2026, the Government has continued to amend the following sanctions regulations implemented under the SEMA:
- Belarus (January)
- Haiti (March)
- Iran (March) (December) (February 2026)
- Moldova (August)
- Myanmar (March)
- Sudan (March)
- Syria (Issuance of General Permit February 2025)
- Russia (June) (June) (June) (August) (November) (February 2026)
- Venezuela (January) (March)
The vast majority of these amendments expand the list of designated persons/entities under Schedule 1 of each respective regulation and members of Russia’s “ghost fleet” under Schedule 1.1 of the Russia Regulations. The amendments to the Russia Regulations also expand the prohibited activities to include:
- Providing financial services or other services to non-Canadians outside Canada in respect of a listed member of Russia’s “ghost fleet” (Schedule 1.1), which have been involved in the transport of goods benefitting Russia;
- Export, sale, supply or shipment of goods related to chemical and biological weapons, jet fuel and additives, goods related to Russian industrial and economic processes and advanced materials related to Russia’s military activities and development of sensitive technology; and
- Iimporting, purchasing or acquiring coal, metals, and a wide range of other goods that generate revenue (e.g. chemicals, plastics, wood, wood products, machinery, precision instruments, furniture) from Russia or any person in Russia.
Notably, OJSC Surgutneftegas was moved from Schedule 3 (debt prohibition) to Schedule 1 (broad dealings prohibition), and Canada has continued to lower the price cap per barrel for crude oil under the G7 framework, most recently in its February 2026 amendments to recognize the fourth anniversary of Russia’s war in Ukraine.
Although Canada continues to implement sanctions in coordination with its allies, Canada has continued to implement unilateral sanctions measures, such as designated persons and entities, not otherwise sanctioned by its allies. Throughout 2026, we expect Canada’s sanctions to continue to diverge from G7 members as each country weighs considerations in ratcheting up or winding down sanctions regimes targeting what are now former governments due to geopolitical developments.
For example, compare the timing of the response of the United States and Canada to the fall of the Assad regime in Syria. It was only in February 2026 (following the 2025 issuance of a general permit under newly expanded authority) when Canada issued significant amendments to its Syria sanctions, lifting broad economic prohibitions that had been in place since May 2011 (we write about it here). The US began to lift its comprehensive sanctions program against Syria in June 2025. Venezuela may provide another example where US military action resulted in the US relaxing sanctions targeting Venezuela oil and gas sectors. While Canada’s Venezuela sanctions do not directly target these sectors, these regulations may be subject to change based on political developments throughout 2026.
Finally, Canada exercised its secondary sanctions authority for the first time, listing entities under the Russia Regulations in order to support the Government’s asset seizure and forfeiture regime and to target companies supporting Russia’s illegal war in Ukraine. Two sets of listing were made in February 2025, with the Government listing the Irish and Dutch ultimate beneficial owners of Volga-Dnepr cargo plane seized by the Government in June 2023, further discussed below. The Government also listed Iranian and Chinese entities accused of supporting Russia’s military-industrial complex and facilitating the transport of military equipment within Russia.
Proposed amendments to the SEMA and the JVCFOA
Private members bill, Bill C-219, continues through the legislative process, having passed its second recording in the House of Commons and currently in consideration before committee. The bill seeks to amend both the JVCFOA and the SEMA to expand the scope of the Government’s authority to designate persons for purposes of “transnational repression”, to restrict visa issuance to family members of designated persons, and to require the Government to apply for forfeiture within 12 months of seizure of property under the existing asset seizure and forfeiture mechanisms, discussed below.
“Transnational repression” is defined as “tactics used by a foreign state to intimidate, harass, surveil or threaten individuals or groups located outside the state borders or physically harm such individuals or members of such groups, including elected officials, political dissidents, human rights defenders, exiled journalists, diaspora communities, civil society activists and refugees, for the purpose of silencing dissent and stifling activism.”
In respect of the SEMA, the bill also seeks to rename the act to the “Sergei Magnitsky Global Sanctions Act”, and amend the sentencing for successful prosecutions proceeding by way of summary conviction proposing fines be increased from CAD 25,000 to 100,000 and imprisonment terms increasing from 1 year to 3 years.
Canada’s blocking statute and developments in Cuba
Since the end of January 2026, the US has declared a national emergency regarding Cuba, authorizing punitive tariffs on any country that supplies oil to Cuba (now declared invalid). As a result, the humanitarian and economic conditions in Cuba have continued to decline. As the Government pledges support to Cuba, Canadian corporations should be aware of their obligations under the 1992 Cuba Order of the Foreign Extraterritorial Measures Act (FEMA) and its interplay with the US Cuba embargo enacted under the Cuban Assets Control Regulations (CACR). At a high level, Canadian corporations are subject to a notification requirement and a prohibition on compliance with the CACR. Canadian subsidiaries of US corporations face a Catch-22 where they are bound to comply with two divergent laws. Canadian corporations may be tapped by the Government, or their NGO partners to provide aid to Cuba and must consider exposure under the CACR where there is a US nexus, and possible repercussions under the FEMA for compliance with the CACR.
Development of Canada’s civil enforcement regime
Canada is relying on its existing AML legislative framework under the PCMLTFA and its administrative agency, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) alongside the CBSA, to establish a sanctions civil enforcement regime in the form of mandatory reporting on suspected sanctions evasion alongside property reporting. These requirements build upon an existing duty to disclose the possession of property to the RCMP or the Canadian Security Intelligence Service (CSIS), stipulated in all Canadian sanctions statutes and the terrorist property reporting regime under the Criminal Code.
Finance Canada’s amendments to the PCMLTFA were spurred on by the Financial Action Task Force (FATF) scheduled 2025 mutual evaluation of Canada (report to be published in June 2026), which assesses the extent to which Canada has implemented the FATF 40 Recommendations largely considered to be the global standard to combat money laundering and terrorist financing. Overtime money laundering compliance has naturally extended to sanctions compliance given that the same financial channels are used by proliferation networks to circumvent sanctions and launder proceeds of crime, which more often than not include proceeds from sanctions violations.
The first building blocks of the civil regime were laid in 2024, with the expansion of suspicious transaction reports to include “sanctions evasion offences”, which we write about here. Amendments to filing Terrorist Property Reports (now “Listed Person or Entity Property Reports”) to include reporting on property of sanctioned persons/entities followed in March and October 2025. Finally, as of April 1, 2025, new importer/exporter reporting requirements came into force, requiring declarations to the CBSA whether goods being imported into or exported from Canada are proceeds of crime, or are related to money laundering, terrorist financing, or sanctions evasion. The CBSA’s official guidance notes that the CBSA continues to evaluate which forms or commercial processes may need to be updated to clarify that reports/declarations made under the Customs Act for existing commercial customs programs serve an additional purpose beyond customs clearance – sanctions evasion reporting. FINTRAC advisories, including the latest advisory following the FATF Plenary in February 2026, focus on sanctions evasion and these new civil reporting obligations.
Currently, the following civil reporting obligations exist under Canada’s sanctions regime:
| Legislative authority | Reporting obligation | Subject of Report | Filing Agency |
| PCMLTFA | Reporting entities | Listed Person or Entity Property Reports filed in respect of: (1) property in a reporting entity’s possession or control that they know is owned or controlled by or on behalf of a terrorist group listed pursuant to section 83.05 of the Criminal Code and information on related transactions. (2) property in a reporting entity’s possession or control that they have reason to believe is owned, held or controlled by or on behalf of a foreign national* pursuant to the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) or a person or entity listed or by an entity owned or controlled by a listed person* on a regulation enacted under the United Nations Act or the Special Economic Measures Act and information on related transactions. *Reporting entities must also consider deemed ownership provisions which deem property of entities controlled by listed persons to be owned by the listed persons. Note: Reporting entities are also required to file a duplicate report regarding the same property with the RCMP under the JVCFOA, the SEMA and the UN Act. | FINTRAC |
| PCMLTFA | Reporting entities | Suspicious transaction reports filed in respect of all completed and attempted transactions where there are reasonable grounds to suspect the transaction is related to the commission or the attempted commission of a sanctions evasion offence, “an offence arising from the contravention of a restriction or prohibition established by an order or a regulation made under the United Nations Act, the Special Economic Measures Act or the Justice for Victims of Corrupt Foreign Officials Act”. | FINTRAC |
| PCMLTFA | Persons arriving in or departing from Canada, or that purchase, sell or cause goods to be imported or exported to or from Canada, regardless of ownership. | Declare whether imported or exported goods are proceeds of crime or are related to money laundering, terrorist financing, or sanctions evasion; and, attest that the goods are in fact being imported or exported. | CBSA |
Advancements under Canada’s seizure and forfeiture mechanism
Canada introduced an asset forfeiture regime in June 2022 under the SEMA and the JVCFOA, which grants authority for the Government to seize and forfeit, and then dispose and redistribute assets owned, held or controlled by designated persons. To forfeit assets, the Government must first issue an Order in Council seizing the assets, followed by an application filed in a provincial court to forfeit the assets.
To date, the Government has issued two seizure orders: (1) an order targeting assets held at a Canadian bank with alleged ownership by Roman Abramovich (December 2022); and (2) an order targeting a Russian-registered cargo aircraft (June 2023 and amended in February 2025) alleged to be owned by designated persons. In order to successfully forfeit the property seized, the Government must show that the property in question is the same property described in the Order in Council and that it is owned, held or controlled directly or indirectly by the person named in the Order in Council.
In March 2025, the Government filed a forfeiture application before the Ontario Superior Court of Justice in relation to the Russian-registered cargo aircraft, marking what will be the first ever judicial consideration of the forfeiture mechanism under section 4.1 of the SEMA. Under the SEMA’s forfeiture provisions, the Government is obligated to serve notice of the forfeiture on the eventual owners of the aircraft. While notice was served on five of six owners, the Government was required to bring a motion seeking to deem the last owner served and asking the court to proceed to the forfeiture hearing.
Enforcement
In 2025, the RCMP charged one individual with violating the SEMA and possession of proceeds of crime. The individual is alleged to have exported, sold, supplied or shipped prohibited goods (microelectronics) to Russia or to persons in Russia between July 17 and December 8, 2022, including items listed on Schedule 7 and the Restricted Goods and Technologies List, in breach of Canada’s Russia sanctions regime, and accordingly, a violation of the SEMA. This is the Government’s first prosecution under Canada’s Russia sanctions regime. The Canadian legal community will be closely watching the prosecution as it will serve as a fundamental precedent on the required elements of the offence, including the requisite intent, that must be proven beyond a reasonable doubt in order to successfully prosecute a violation of the SEMA..
Canada continues to coordinate with its allies to curb sanctions evasion and sanctions circumvention. The G7’s joint guidance on preventing Russian export control and sanctions evasion, as well as updated guidance from FINTRAC remains a helpful tool to identify evasion tactics for Canadian businesses with heightened sanctions compliance risks. This guidance includes a high-priority list of items that pose a risk of diversion to Russia, a list of red flag indicators, best practices to address red flags, and resources for screening tools and guidance documents to assist with due diligence efforts. Canadian businesses should update their compliance policies to address sanctions evasion risks and exporters should expect increased trade control verifications by the CBSA, especially for goods destined to known transshipment hubs. Businesses must be mindful that violations of Canadian sanctions legislation may result in large fines and/or imprisonment and that liability extends to both organizations and individual employees. At this time, the Remediation Agreement regime (i.e., deferred prosecution agreements) available under Part XXII.1 of the Criminal Code does not extend to offences listed under Canadian sanctions or export controls legislation. Accordingly, businesses have less avenues to pursue a non-trial resolution in the event of a sanctions violation subject to criminal prosecution.
