On July 20, 2023, Canada announced additional amendments to the Special Economic Measures (Russia) Regulations (the “Regulations”) in response to individuals and entities “complicit in Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity”. These amendments list an additional 39 individuals and 25 entities under Schedule 1 of the Regulations and took effect on July 19, 2023.
There are now over 1,800 parties listed under Schedule 1 of the Regulations. Among the newly listed parties are persons connected to Russia’s military-industrial complex and nuclear sector including “Private Military Company Wagner, the paramilitary sector, and the Orlan drone supply chain”. The newly listed parties also include persons from Russia’s educational and cultural sectors, such as the Minister of Culture, leaders of major museums and Russian celebrities, who support the “Kremlin’s efforts to Russify Ukraine’s culture.”
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.
Note that a novel deeming provision implemented under the Special Economic Measures Act came into force at the end of June 2023. Pursuant to the deeming provision, any property of an entity controlled by a designated person is deemed to be property owned by that designated person. Accordingly, the dealings prohibition described above would also apply to that property. The deeming provision includes three broad criteria used to determine what constitutes control. Baker McKenzie’s Canadian international trade and customs teams previously wrote about this provision here.
Since February 2022, Canada has continually updated the Regulations, as well as the Special Economic Measures (Belarus) Regulations and the Special Economic Measures (Ukraine) 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 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.
An unofficial copy of the legislative amendments to the Special Economic Measures (Russia) Regulations that came into effect on July 19, 2023 are available on Global Affairs Canada’s website here and here.