On February 24, 2022 the Canadian Government published amendments to the Special Economic Measures (Russia) Regulations and Special Economic Measures (Ukraine) Regulations (the “Amended Regulations”). The Amended Regulations impose new sanctions measures against Russia and the areas controlled by the so-called Donetsk People’s Republic (“DPR”) and Luhansk People’s Republic (“LPR”). Specifically, the Amended Regulations aim to implement measures announced by Prime Minster Justin Trudeau on February 22, 2022 in response to Russia’s recognition of the independence of the so-called DPR and LPR, and include additional measures in response to the subsequent invasion of sovereign Ukrainian territory.
Due to ongoing developments in the region, Canada may announce and implement further measures in alignment with its allies in the coming days. We will publish additional articles as the text of any future sanctions legislation becomes available.
1. Measures Applicable to Russia
The Amended Regulations impose additional measures on a broad range of Russian entities and individuals.
First, the Amended Regulations implement measures first announced by Prime Minister Trudeau on February 22, 2022. These measures include:
- a prohibition for any person in Canada or Canadian outside Canada to transact in, provide financing for or otherwise deal in new debt, directly or indirectly, including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers’ acceptances, discount notes, treasury bills, commercial paper and other similar instruments, issued by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation and the Ministry of Finance of the Russian Federation or in relation to the any such person or the property, interests and rights in property of such persons;
- the addition of members of the Russian State Duma who voted for the decision to recognize the independence of the so-called DPR and LPR as Schedule 1 designated persons subject to restrictions discussed below; and
- the addition of two Russian state-backed banks, VEB and Promsvyazbank PJSC, to the Schedule 1 designated persons list subject to restrictions.
Second, subsequent to Russia’s further invasion of Ukraine the Schedule 1 designated persons list was amended to include 58 additional persons (27 entities and 31 individuals). The entities added to the list include large Russian financial institutions such as Sberbank, VTB, Alfa-Bank and the Russian Agricultural Bank as well as certain Russian corporations including Rostec, Gazprom and Transneft.
Under the restrictions applicable to Schedule 1 designated persons, persons in Canada and Canadians outside Canada are prohibited from:
- dealing in any property, wherever situated, held by or on behalf of a designated person;
- entering into or facilitating, directly or indirectly, any transaction involving a designated person;
- providing any financial or related service in respect of a dealing involving a designated person;
- making any goods, wherever situated, available to a designated person; and
- providing any financial or related service to or for the benefit of a designated person.
Additionally, Canada announced the cancellation of all valid permits for export or brokering of controlled goods and technology to Russia and a prohibition on the issuance of new export permits in respect of any controlled goods or technology destined to Russia. Only export permits and export permit applications related to specific end-uses such as medical supply and humanitarian needs may be considered for exception, on a case-by-case basis.
2. Measures Applicable to the so-called DPR and LPR
The Amended Regulations extend measures similar to those imposed on the Crimea region in 2014 to the territory controlled by the so-called DPR and LPR.
The first set of amendments, based on the announcement from February 22, 2022, extends the measures that had been imposed against the Crimea region to the so-called DPR and LPR (the “Targeted Areas”) and prohibit persons in Canada or Canadians outside Canada from:
- making an investment involving a dealing in any property located in the Targeted Areas owned, held or controlled by any government of the Targeted Areas, or by a person located in a Targeted Area, or a person acting for any such entity or person;
- providing or acquiring financial or related services with respect to any investment mentioned above;
- importing, purchasing or acquiring goods, wherever situated, from the Targeted Areas or any person located there;
- exporting goods destined for a Targeted Area, or selling, supplying or transferring goods, wherever situated, to any person in a Targeted Area;
- providing technical assistance to a Targeted Area or any person located in a Targeted Area;
- providing financial or other services related to tourism, or acquiring such services from, any Targeted Area or any person located in a Targeted Area; and
- docking a cruise ship in the Crimea region that has been registered or licensed under any act of Canada’s parliament, except in emergency situations.
Second, subsequent to Russia’s further invasion of Ukraine, an additional four individuals were added to the list of designated persons under Schedule 1 (which now includes 206 individuals and 42 entities). The same restrictions apply to designated persons under these measures as under the regulations applicable to Schedule 1 designated persons in Russia, as discussed above.