Canada: Canadian Sanctions Target Former Ukrainian Government Officials

The Office of the Superintendent of Financial Institutions (OSFI) has issued a notice dated March 5, 2014, directing banks, trust companies, insurers and other federally regulated financial institutions (FRFIs) to immediately freeze assets of the former Ukranian president, Viktor Yanukovych, and his close associates and to refrain from having any dealings with these individuals.

Although FRFIs bear the highest compliance burden, these regulations will apply to all persons within Canada, as well to Canadians located outside the country.

In imposing these targeted sanctions, Canada is acting in concert with the EU and the United States. The EU imposed measures on March 5 similar to those implemented by Canada. The Decision of the Council of the European Union provides for the freezing of funds and assets of the same individuals targeted by Canada. In the case of the United States, on March 6, 2014, President Obama signed an Executive Order permitting the blocking of property of persons who undermine both the democratic institutions and the peace and stability of Ukraine. The Executive Order gives the U.S. Secretary of the Treasury authority to penalize both Ukrainian and Russian persons. At this time a specific list has not been issued by the U.S. Treasury Department.

Background

The Freezing Assets of Corrupt Foreign Officials Act (FACFOA) permits the Canadian government, at the written request of a foreign state, to freeze the assets of or prohibit dealings with persons who misappropriated or inappropriately acquired the property of the foreign state by virtue of their office or a personal business relationship. The Governor-in-Council may make an order or regulation under the Act if it is satisfied that the foreign country is in a state of turmoil or political uncertainty and if making an order or regulation is in the interest of international relations. This legislation was first enacted at the time of the Arab Spring to target former Egyptian and Tunisian government officials.

The Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (Ukraine Regulations) were made effective on March 5, 2014, and were prompted by a request from the new Ukrainian government to Canada. The Ukraine Regulations target 18 Ukrainian officials and certain family members by requiring that their assets within Canada be frozen, and impose on all Canadians (not just FRFIs) searching, freezing, monitoring, disclosure and due diligence obligations.

Prohibitions

The Ukraine Regulations freeze the assets of listed politically exposed foreign persons (PEFPs) by prohibiting the following activities by anyone in Canada or any Canadian outside Canada:

  1. Dealing, directly or indirectly, in any property, wherever situated, of a listed PEFP;
  2. Entering into or facilitating, directly or indirectly, any financial transaction related to a dealing referred to in point 1;
  3. Providing financial services or other related services in respect of any property of a listed PEFP.

Compliance Obligations on Financial Institutions

Practically speaking, banks, trust companies, insurers and other FRFIs will bear the greatest compliance burden for implementing the Ukraine Regulations because they will have to ensure that transactions with and financial services provided to listed PEFPs are blocked and reported. The financial services that are prohibited under the Ukraine Regulations encompass a wide range of services, including asset management, lending (including mortgage lending) and the provision of property insurance and other insurance policies and services.

These sanctions require financial institutions to search their customer records in order to identify financial assets to which the asset freeze applies. OSFI has advised that, at a minimum, it expects that FRFIs will be able to search their records for the listed PEFPs at least on a weekly basis and more frequently if need be. The Ukraine Regulations impose continuous searching and reporting obligations. The PEFP list is exhaustive for now, and FRFIs are not required to determine whether other persons are or were closely associated with PEFPs and therefore would be captured by the Ukraine Regulations.

OSFI states that certain financial institutions that are subject to the money laundering and anti-terrorism financing legislation (Proceeds of Crime (Money Laundering) and Terrorist Financing Act) are also required to search their corporate records to determine the ownership of their corporate and other business clients, and obtain and record prescribed information on persons that own or control – directly or indirectly – 25% or more of their clients. OSFI therefore expects that these financial institutions will need to review their records to determine if their clients are owned or controlled, directly or indirectly, by PEFPs designated under the Ukraine Regulations.

If a financial institution finds that it has property in its possession or control that it has reason to believe is owned or controlled – directly or indirectly – by PEFPs, or if it is providing prescribed financial or other services to PEFPs, it must immediately report that information to the Royal Canadian Mounted Police.

Compliance Obligations on All Canadians

Canadian companies should carefully review their business activities abroad and monitor any transactions that could implicate compliance under the Ukraine Regulations. In particular, companies should be alert to any involvement of the persons listed in the Ukraine Regulations, in addition to the companies and persons listed in the other regulations made under the United Nations Act, the Special Economic Measures Act, the Criminal Code and the FACFOA.

Canadian companies should also continue to stay up to date on regulatory developments, because the Canadian government may decide in conjunction with the United States and the EU to broaden the sanctions to deter Russia from its territorial and other ambitions in Ukraine.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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