Canada: OSFI Releases Instruction Guide on Listings and Sanctions Laws

Last Updated: July 2 2010
Article by Stuart Carruthers


Federal, provincial and foreign insurance companies doing business in Canada are subject to obligations under what are commonly referred to as the "Listings and Sanctions Laws" relating to terrorists, terrorism financiers, and financiers of nuclear proliferation and weapons of mass destruction (the Listings and Sanctions Laws). These obligations are in addition to requirements designed to combat terrorist financing contained in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).

In order to provide guidance to federally-regulated financial institutions, including insurance companies, in complying with the Listings and Sanctions Laws, Canada's federal financial institutions regulator, the Office of the Superintendent of Financial Institutions (OSFI), recently released an "Instruction Guide" that provides OSFI's interpretation of the relevant legal obligations. Specifically, the Instruction Guide addresses the legislative requirements relating to identifying designated persons, prohibited activity with respect to assets of designated persons and the reporting requirements pertaining to the assets of designated persons. The Instruction Guide reflected the results of a consultation with industry stakeholders following the release for comment of a draft version of the Guide in February 2010.

This Update provides a brief summary of obligations contained in the Listings and Sanctions Laws and which are the subject of the Instruction Guide.

Listings and Sanctions Laws

(A) Criminal Code, R.S.C. 1985, c. C-46.

Freezing property

Part II.1 of the Criminal Code (sections 83.01 to 83.33) contains various provisions respecting terrorism that apply to Canadian insurance companies. Section 83.05(1) of the Criminal Code provides a mechanism by which the Governor in Council may place an entity (defined as a person, group, trust, partnership or fund, or unincorporated association or organization) on a list of terrorist entities. Section 83.08(1) of the Criminal Code prohibits dealing directly or indirectly in any property that is owned or controlled by or on behalf of a terrorist group (the definition of "terrorist group" includes, but is not limited to, a listed entity), entering into or facilitating any transaction in such property or providing any financial or other related services in respect of such property to, for the benefit of, or at the direction of a terrorist group. A person that freezes property pursuant to section 83.08(1) will not be held liable in a civil action so long as the person "took all reasonable steps to satisfy themselves" that the property in question was owned or controlled by a terrorist group.


Under section 83.1(1) of the Criminal Code, every person in Canada and all Canadians outside Canada must disclose forthwith, to the Commissioner of the RCMP and the Director of CSIS, the existence of property in their possession or control that they know is owned or controlled by, or on behalf of, a terrorist group. Information about a transaction or proposed transaction in respect of such property must also be disclosed. Persons making such disclosure in good faith are immune from criminal and civil proceedings.


Section 83.11(1) of the Criminal Code requires insurance companies to determine on a continuing basis whether they are in possession or control of property owned or controlled by, or on behalf of, a listed entity. While it is unclear how often such a determination must be made in order to comply with the requirements, OSFI's Instruction Guide recommends downloading all applicable lists (including those applicable to the United Nations Regulations, below) on a weekly basis at a minimum. According to OSFI, circumstances may dictate more frequent determinations and new client names should be checked against the applicable lists "as part of, or as soon as reasonably possible after, the process of opening new accounts or otherwise entering into new business relationships." There is no assurance, however, that the courts will require or accept OSFI's interpretation of the requirements. Federally regulated insurance companies must also report on a monthly basis to OSFI whether they are in possession or control of such property and, if so, the number of persons, contracts or accounts involved and the value of the property. Further, according to OSFI, a short or long Form 525 and a short or long Form 590 are to be filed each month. The relevant short forms are to be used for "nil" reports where there is no frozen property to be reported and the relevant long forms are used to file positive reports. Companies making such disclosure are immune from criminal and civil proceedings when making reports in good faith.


Those in contravention of any of the above sections are liable on summary conviction to a fine of up to $100,000 and/or imprisonment of one year or, on a conviction on indictment, to imprisonment for up to 10 years.

B) Regulations under the Special Economic Measures Act (Canada), S.C. 1992, c. 17.

Section 4(1)(a) of the Special Economic Measures Act (SEMA) allows the Governor in Council to make orders or regulations restricting or prohibiting an enumerated list of activities with respect to a foreign state. The list of activities that may be prohibited or restricted includes dealing in property held by the relevant foreign state or a person in the foreign state. To that end, regulations under SEMA have been made with respect to Burma (SOR/2007-285) and Zimbabwe (SOR/2008-248) (collectively, the Special Economic Measures Regulations). Among other things, the Special Economic Measures Regulations prohibit Canadians from dealing in the property of designated persons and, in the case of Burma, from providing or acquiring financial services. Much like the provisions of the Criminal Code, insurance companies, among others, must determine on a continuing basis whether they are in possession or control of property owned or controlled by or on behalf of designated persons and disclosure requirements also exist. Again, it is unclear what will satisfy the requirement that determinations be made on a "continuing basis".

(C) Regulations under the United Nations Act (Canada), R.S.C. 1985, c. U-2.

The United Nations Act provides the Governor in Council with the authority to make orders and regulations necessary or expedient for enabling United Nations Security Council measures. Numerous regulations have been made under this legislation to address Security Council resolutions, including those dealing with Al-Qaida and the Taliban, Iran, Iraq and North Korea (collectively, the UN Regulations). Similar to the restrictions discussed above, the regulations generally prohibit Canadians and persons in Canada from dealing in property held in the respective state or providing financial services related to property held in the state.

Core Provisions

The core rules establishing reporting and property freezing requirements are repeated in substantially the same form in the relevant Criminal Code provisions, the Special Economic Measures Regulations, and the UN Regulations. Generally, the only significant difference relates to the definition of the property or persons targeted.

"Freezing" of Assets

  • no person in Canada and no Canadian outside Canada shall knowingly deal directly or indirectly in any [designated property];
  • no person in Canada and no Canadian outside Canada shall knowingly enter into or facilitate, directly or indirectly, any financial transaction related to a dealing in [designated property];
  • no person in Canada and no Canadian outside Canada shall knowingly provide any financial services or any related services in respect of any [designated property];
  • no person in Canada and no Canadian outside Canada shall knowingly make any property [or any financial or other related service] available, directly or indirectly, to or for the benefit of [a designated person];

Duty to Determine

  • every [insurance company] must determine on a continuing basis whether it is in possession or control of property owned or controlled [directly or indirectly] by or on behalf of [a designated person];


  • every [insurance company] must report, monthly, to the principal agency or body that supervises or regulates it under federal or provincial law either:
    • that it is not in possession or control of any [designated property]; or
    • that it is in possession or control of such property, in which case it must also report the number of persons, contracts or accounts involved and the total value of the property; and
  • every person in Canada and every Canadian outside Canada shall disclose without delay to the Commissioner of the RCMP and/or to the Director of CSIS:
    • the existence of property in their possession or control that they have reason to believe is owned or controlled [directly or indirectly] by or on behalf of [a designated person]; and
    • information about a transaction or proposed transaction in respect of such property.


Despite similarities, there are some noteworthy variations in the provisions:

  • the regulations in respect of Burma, Côte d'Ivoire, Congo, Eritrea, Liberia, Somalia, Sudan and Zimbabwe do not require monthly reporting on suspicious property to a regulatory body;
  • not all regulations require disclosure to the RCMP and/or CSIS, and the regulations in respect of Burma, Eritrea, Somalia, and Zimbabwe require that the possession of property owned by designated persons be disclosed only to the RCMP and not CSIS;
  • the equivalent disclosure requirement in the regulations for Iraq requires disclosure to the Department of Foreign Affairs and International Trade (DFAIT) and, unless notified otherwise by DFAIT, ultimately the transfer of such property to the Federal Reserve Bank of New York;
  • each statute or regulation imposes a different set of "designated persons";
  • "property" is defined differently in the UN Regulations and Special Economic Measures Act;
  • the regulations in respect of Terrorism and in respect of Al-Qaida and the Taliban impose additional funding restrictions; and
  • under the regulations in respect of Burma, investment in property held by, or on behalf of, a person in Burma is prohibited, as are financial services transactions with persons in Burma, with limited exceptions.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions