On June 1, 2023, Canada enacted the Special Economic Measures (Moldova) Regulations (the “Regulations”) in response to Russia’s ongoing war of aggression against Ukraine. The Regulations are targeted sanctions, which will serve to undermine Russia’s influence over Moldova and reaffirm its commitment to continue to use its sanctions regime to target foreign states that are supporting Russia’s war in Ukraine. The Regulations entered into force on May 30, 2023 and list seven individuals and one entity under Schedule 1.
The seven listed individuals include Moldovan oligarchs, business people, parliamentarians, and politicians who are connected to Russia. The sole listed entity is a political party closely connected to one of the listed individuals “which has worked to destabilize Moldova’s democratically-elected government in favour of Russia.”
Generally speaking, designations made under Schedule 1 of the Regulations imposes an asset freeze and dealings prohibition against the designated person. Pursuant to the Regulations, any person in Canada or any Canadian outside Canada cannot:
- deal in any property, wherever situated, that is owned — or that is held or controlled, directly or indirectly — by a listed person;
- 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.
Notably, the government of Canada cites that “systemic corruption by Moldovan oligarchs has impacted several of Moldova’s political and economic institutions, which have then been used as instruments of Russia’s malign influence campaign in Moldova and beyond.” The government notes that the purpose of the sanctions is to “undermine Russia’s efforts to restrain Moldova’s national government from exercising full sovereignty over its territory.”
This is the first time that Canada has sanctioned Russian collaborators in Moldova. Note that the government has tabled amendments to the Special Economic Measures Act that propose to expand the government’s authority to prohibit activities with persons “outside Canada who [are] not Canadian”. As drafted, this amendment would permit the government to prohibit activities with persons that do not have the typical nexus (e.g. geographic presence, incorporation, citizenship) with a foreign state targeted by regulations enacted under the SEMA. In practice, the expanded authority would allow the Government to designate any person outside Canada that is not Canadian under a country-specific SEMA regulation to prohibit certain activities with that person. Once these amendments are enacted it is possible that other Russian collaborators could be designated under the existing Special Economic Measures (Russia) Regulations.
Businesses should continually assess their sanctions compliance in this shifting legal landscape. Regulations enacted under the Special Economic Measures Act obligate persons in Canada and Canadian citizens to disclose certain property held 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 held by Schedule 1 entities.