Over the course of August 2023, Canada imposed sanctions on Iran, Belarus, Lebanese and Russian parties, and amended the definition of “designated” and “listed” persons in its country-specific sanctions regulations to combat sanctions circumvention.
Part 1: New Sanctions against Iran, Belarus, Lebanese and Russian nationals
During the week of August 7, Canada announced additional amendments to designate persons under the Special Economic Measures (Iran) Regulations (the “Iran Regulations”), the Special Economic Measures (Belarus) Regulations (the “Belarus Regulations”), and the Justice for Victims of Corrupt Foreign Officials Act (“JVCFOA“). All of these amendments entered into force as of August 4.
On August 17 and August 24, Canada further amended the Special Economic Measures (Russia) Regulations (the “Russia Regulations”) to designate persons. These amendments entered into force as of their respective date of amendment.
- Amendments to the Iran Regulations
The amendments to the Iran Regulations list an additional 7 individuals under Schedule 1 and took effect on August 4, 2023. The newly designated persons include a former commander of the Islamic Revolutionary Guard Corps Navy and Strategic Centre and other officials involved in entities that supply Iran’s national Law Enforcement Command. There are now over 360 parties listed under Schedule 1 of the Iran Regulations. An unofficial copy of the amendments are available on Global Affairs Canada’s website here.
- Amendments to the Belarus Regulations
The amendments to the Belarus Regulations list an additional 9 individuals and 7 entities under Schedule 1 of the Regulations and they took effect on August 4, 2023. The amendments were imposed in “response to the ongoing gross and systemic violations of human rights occurring in Belarus” and “target persons who are complicit in Russia’s ongoing violations of Ukraine’s sovereignty and territorial integrity”. The individuals include government officials, judges and family members of pre-existing designated persons. The entities include the Belarus Ministry of Defence and companies alleged to be related to the Belarus military. There are now over 250 parties listed under Schedule 1 of the Belarus Regulations. An unofficial copy of the amendments are available on Global Affairs Canada’s website here.
- Amendments to the Russia Regulations
The August 17 amendments list an additional 15 individuals and 3 entities to Schedule 1 of the Russia Regulations in response to rising levels of human rights violations and state-sponsored violence faced by political opponents and critics as Russia attempts to repress internal dissent. The individuals include senior officials of the Russian government, judiciary and investigative courts. The entities include federally funded courts, such as the Basmanny District Court, which were alleged to have been directly involved in human rights abuses against Russian opposition leaders, notably Valdimir Kara-Murza and Alexei Navalny, and other Russian citizens.
The August 22 amendments lists an additional 4 individuals and 29 entities that have direct ties to Russia’s military-industrial complex, as well as to its financial and nuclear sectors to Schedule 1 of the Russia Regulation. The listed individuals include a Russian Armed Forces Colonel who was found guilty by the District Court of the Hague of downing Malaysia Airline’s MH17 flight on July 17, 2014 while it was flying over Eastern Ukraine. The listed entities include companies developing products for dual civilian/military use, including Promtekhnologiya LLC, as well as financial entities previously sanctioned by Canada’s G7 allies and directly associated with the Putin regime.
There are now over 1830 parties listed under Schedule 1 of the Russia Regulations. An unofficial copy of the August 17 amendments is available here, and for the August 22 amendments here.
Generally speaking, designation under Schedule 1 of the Regulations imposes an asset freeze and dealings prohibition against the designated person. Subject to limited exceptions, any person in Canada or any Canadian outside Canada cannot:
- deal in any property, wherever situated, that is owned, held or controlled 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 available any goods, wherever situated, to a designated person listed in Schedule 1 or to a person acting on their behalf; or
- provide any financial or related service to, or for the benefit of, a designated person listed in Schedule 1.
Additionally, individuals listed in Part 1.1 of Schedule 1 of the Regulations are also inadmissible to Canada under the Immigration and Refugee Protection Act.
- Lebanese nationals designated under the JVCFOA
On August 4, 2023, Canada amended the JVCFOA for the first time since 2019 to include 3 Lebanese nationals who were “involved in acts of significant corruption, including the misappropriation of public assets for personal gain and the transfer of the proceeds of corruption to foreign states”. Generally speaking, designation under the JVCFOA imposes an asset freeze and dealings prohibition against the designated person. An unofficial copy of the amendments are available on Global Affairs Canada’s website here.
Any person in Canada or any Canadian outside Canada cannot:
- deal in any property, wherever situated, of a designated foreign national;
- enter into or facilitate, directly or indirectly, any transaction related to such a dealing;
- provide any financial or other services to or for the benefit of or on the direction or order of a designated foreign national;
- acquire financial services or other services for the benefit of or on the direction or order of a designated foreign national; and
- make available any property, wherever situated, to a designated foreign national or a person acting on their behalf.
Businesses should continually assess their sanctions compliance in this shifting legal landscape. Special Economic Measures Act regulations and the JVCFOA obligate persons in Canada and Canadian citizens to disclose certain property owned or controlled by Schedule 1 entities and any related transactional information to the RCMP. Additionally, certain entities have a continuing duty to determine and disclose certain property owned, held or controlled by Schedule 1 entities.
Note that a novel deeming provision implemented under the Special Economic Measures Act and the JVCFOAcame into force at the end of June 2023. Pursuant to the deeming provisions, any property of an entity controlled by a designated person is deemed to be property owned by that designated person. Accordingly, the dealings prohibitions described above would also apply to that property. The deeming provisions include three broad criteria used to determine what constitutes control. Baker McKenzie’s Canadian international trade and customs teams previously wrote about these provisions here.
Part 2: Amended Definitions of “Designated” and “Listed” Persons
On August 4, Canada amended 13 country-specific sanctions regulations[1] enacted under the Special Economic Measures Act. The definition of “designated” or “listed” person in these regulations were amended to expand the authority of the Government of Canada to designate certain persons. Specifically, the Government of Canada may now designate former nationals of a foreign state. Prior to these amendments, only individuals who were “a national of” the sanctioned foreign state could be designated or listed. The Government’s rationale for the amendments is to prevent sanctions circumvention. Prior to the amendments, if a designated or listed individual renounced their citizenship in the sanctioned foreign state, then the Government lacked authority to designate them under a particular sanctions statute. Given the amendments, the Government can now sanction former nationals and renouncing citizenship no longer curtails the Government’s legislative authority to sanction an individual.
[1] Belarus; Haiti; Iran; Moldova; Myanmar; Nicaragua; People’s Republic of China; Russia; South Sudan; Sri Lanka; Syria; Ukraine; and Venezuela
