On February 24th, 2022, Canada published its updated sanctions in relation to the situation in Ukraine. In response to what the Government of Canada views as an unprovoked Russian invasion of Ukraine, Canada has amended the Special Economic Measures (Russia) Regulations ("Russia Regulations"), and the Special Economic Measures (Ukraine) Regulations ("Ukraine Regulations"). Canada also published a new Notice to Exporters and Brokers effectively barring the export of controlled goods and technology to Russia. The scope of Canada's sanctions is among the broadest yet imposed.
1. Special Economic Measures (Russia) Regulations
a. Schedule 1 Additions
The amendments to the Russia Regulations1 include the addition of 382 persons to the existing list of 120 sanctioned individuals under Schedule 1.2 The additions to Schedule 1 include members of the Russian State Duma who voted for the decision to recognize the independence of the Donetsk and Luhansk regions, among other Russian nationals.
Section 3 of the Russia Regulations prohibits persons in Canada and Canadians abroad from:
- dealing in any property, wherever situated, held by or on behalf of persons and entities under Schedule 1;
- entering into or facilitating, directly or indirectly, any transaction related to such a dealing;
- providing any financial or related service in respect of such a dealing;
- making goods, wherever situated, available to a designated person under Schedule 1; and,
- providing any financial or related service to or for the benefit of a designated person or entity under Schedule 1.
b. Schedule 2 Additions
In addition, 29 entities, mainly Russian financial institutions, including VEB and Promsvyazbank PJSC, were added to the existing list of 71 designated Russian entities under Schedule 2 of the Russia Regulations.3 Under subsections 3.1(1) and 3.2(1), respectively, it is prohibited for any person in Canada or any Canadian abroad to transact in, provide financing or otherwise deal in new debt of longer than thirty days and to provide financing for or otherwise deal in securities of Schedule 2 persons.
c. Schedule 3
No new entities or persons have been added to Schedule 3, in connection with which the Russia Regulations prohibit (under subsection 3.1(1.1)) dealing in new debt of longer than ninety days.
d. New Schedule 3.1
The amendments also include the creation of a new Schedule 3.1, which lists three additional sanctioned entities:
- Central Bank of the Russian Federation
- National Wealth Fund of the Russian Federation
- Ministry of Finance of the Russian Federation4
Under new subsection 3.1(1.2) of the Russia Regulations, it is prohibited for any person in Canada and any Canadian abroad to deal in new debt issued by these entities.
e. Oil Exploration and Production
The Russia Regulations already impose restrictions on the oil and gas sector. Section 3.3 of the Russia Regulations prohibit the export, sale, supply or shipping of goods listed in Schedule 4, to Russia or to any person in Russia for their use in offshore oil (depth greater than 500m), shale oil or Arctic oil exploration and production. This includes a ban on the provision of any financial, technical or other services related to the goods subject to this prohibition. These specific sectorial sanctions have not been amended, but the situation remains very dynamic and further restrictions on the energy sector (or others) could be adopted swiftly.
f. Other Considerations
It is important to underscore that under section 5 of the Russia Regulations, any person in Canada and any Canadians abroad are prohibited from knowingly causing, facilitating, or assisting or doing anything that is intended to cause, assist, or facilitate, a prohibited activity. This is a very broad prohibition that can apply to any person in Canada or Canadian abroad who may have dealings with a listed person.
Notably, there are no amendments to exceptions to the obligations or the duty to determine and disclosed imposed upon various Canadian financial institutions and other entities.
2. Special Economic Measures (Ukraine) Regulations
The amendments to the Ukraine Regulations5 include the addition of four persons to the existing list of 202 sanctioned individuals. This includes:
- Taras Romanovych KOZAK
- Volodymyr Mykolayovich OLIYNYK
- Oleg Anatoliyovych VOLOSHYN
- Vladimir Leonidovich SIVKOVICH
The Ukraine Regulations include essentially the same prohibitions as for Schedule 1 persons under the Russia Regulations.
In addition, Canada extended the existing dealings prohibitions covering the Crimea region to include the non-government-controlled areas of Donetsk (DNR) and Luhansk (LNR).This ban effectively prohibits any person in Canada and Canadians abroad from:
- Making an investment that involves a dealing in any property located in that region that is owned, held or controlled by Crimea, LNR, DNR region of Ukraine or a person in the Crimea, LNR, DNR regions of Ukraine, or a person acting on behalf of or at the direction of the Crimea, LNR, DNR regions of Ukraine or a person in the Crimea, LNR, DNR regions of Ukraine;
- Providing or acquiring financial or other services for an investment in the above;
- Importing purchasing or acquiring goods, wherever situated, from the Crimea LNR, DNR regions of Ukraine or any person in the Crimea, LNR, DNR regions of Ukraine;
- Exporting goods destined for the Crimea, LNR, DNR regions of Ukraine or selling, supplying or transferring goods, wherever situated, to any person in the Crimea, LNR, DNR regions of Ukraine;
- Providing technical assistance to the Crimea, LNR, DNR regions in Ukraine or any person in the Crimea LNR, DNR regions of Ukraine;
- Providing financial or other services related to tourism to, or acquire such services from, the Crimea, LNR, DNR regions of Ukraine or any person in the Crimea, LNR, DNR regions of Ukraine;
- Docking a cruise ship in the Crimea region of Ukraine that is registered or licensed, or for which an identification number has been issued, under any Act of Parliament.6
The amended Ukraine Regulations (at section 5) further prohibit any person in Canada and any Canadians abroad from knowingly causing, facilitating, or assisting or that is intended to cause, assist, or facilitate, a prohibited activity.
3. Notice to Exporters and Brokers- Russia
In addition to the above sanctions, Canada has published a new Notice to Exporters and Brokers. Under this Notice, export permits previously granted have been immediately cancelled, and Canada will not issue new permits for the export and brokering of controlled goods and technology to Russia. Permits for medical and humanitarian needs may be considered on a case-by-case basis.
This client alert forms part of various client alerts by Dentons Global Sanctions Team on the situation in Ukraine.
Footnotes
1 Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-0027) and Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2022-0029).
2 Ibid.
3 SOR/2022-0029, supra, note 1.
4 SOR/2022-0027, supra, note 1.
5 Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2022-0028) and Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2022-0030).
6 SOR/2022-0030, supra, note 5.
About Dentons
Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
