Canada: Canadian Government Steps Up Enforcement Of Economic Sanctions

For the first time in over 20 years since the enactment of the Special Economic Measures Act (SEMA), an Alberta-based company was charged with violating this statute by attempting to export controlled goods valued at $15 to the Islamic Republic of Iran. The company pleaded guilty and the plea agreement entered in court on April 14, 2014, required that Lee Specialties Ltd. (Lee) pay a fine of $90,000.

This Update summarizes the facts related to this conviction, the legislative basis for the conviction, the apparent increase in Canadian and international sanctions enforcement activity and the necessity for an effective export compliance program to manage the legal risks inherent in engaging in international business transactions, particularly those that are potentially subject to Canadian and international economic sanctions.

Facts Related to the Conviction

In January 2012, officers from the Canada Border Service Agency (CBSA) detained Lee's shipment of Viton O-rings destined for Iran and, along with the RCMP, launched an investigation into the company's attempted export. The exportation of Viton O-rings to Iran has been controlled since July 22, 2010, because of potential use in the nuclear industry.

The CBSA and RCMP executed three search warrants on Lee, and the RCMP subsequently laid charges on February 27, 2014, against the company under SEMA, the Customs Act and the United Nations Act. Lee admitted in the plea agreement that during the relevant period, "seals and gaskets made of Viton fluoro-elastomers" listed in Schedule 2 of the Iranian sanctions regulations were prohibited for export to Iran, and that the goods that Lee had attempted to export were covered by that description.

Legislative Basis for the Conviction

SEMA allows the Canadian government to implement sanctions in one of two situations: (i) to implement a decision, resolution or recommendation of an international organization of states, or association of states, of which Canada is a member, and that calls for economic measures against a foreign state; or (ii) when the Governor in Council believes that a grave breach of international peace and security has occurred that will result in a serious international crisis. The Governor in Council can make any order or regulation under SEMA that prohibits Canadians (or persons in Canada) from dealing with a foreign state or designated persons. Such regulations can prohibit Canadians from exporting goods, importing goods, transferring technical data and technology or providing services, including financial services, to the foreign state or certain designated persons.

Canada uses SEMA to advance foreign policy goals and objectives that it shares with its major trading partners such as the United States and the European Union, particularly when there is no basis under the United Nations Act for imposing Canadian sanctions (as the latter legislation requires that a UN Security Council Resolution be in place).

There are currently seven countries subject to Canadian sanctions under SEMA, with those against Iran, North Korea and Syria being the most comprehensive and those against Burma, Russia, Ukraine and Zimbabwe being more focused and targeted. Canada's economic sanctions against Iran were first made effective on July 22, 2010 through regulations under SEMA, which have subsequently been amended and broadened on five occasions.

Other Legislative Instruments Available to the Canadian Government

In addition to SEMA, the Canadian government is able to impose various measures, including sanctions, asset freezes, ban on certain shipment of goods and services (including financial services), ban on transfer of technical data and technology, and restrictions on dealings with individual, entities and countries under the United Nations Act, the Export and Import Permits Act, the Freezing Assets of Corrupt Foreign Officials Act and the Criminal Code.

For example, the Canadian government has taken recent measures against certain former Ukrainian government officials and Russians under the Freezing Assets of Corrupt Foreign Officials and the SEMA. Regulations issued under SEMA establish lists of designated persons – individuals and entities – considered to have directly or indirectly facilitated and supported the deployment of Russian armed forces in Crimea. These regulations impose freezes on the assets of designated persons and prohibit persons in Canada and Canadians abroad from dealing with designed persons. In addition, the Regulations impose disclosure obligations on Canadians if they find that they possess or control property of designated persons. The Regulations are constantly being revised and broadened as the situation in Ukraine continues to deteriorate, and Canada has coordinated these sanctions in conjunction with similar efforts by the United States and the European Union.

Lessons from the Lee Conviction

Canadian companies should be aware that the Canadian government has stepped up enforcement of various economic crimes, which include the violation of international sanctions laws and engagement in foreign corrupt activities (see Osler Update, August 21, 2013).

In the present case, the RCMP and the CBSA aggressively investigated and laid charges, leading to a conviction and fine against Lee of $90,000 for attempting to export items that were valued at $15. This action demonstrates that the legislative measures discussed above will be more actively enforced, notwithstanding that some of these laws and regulations have been in force for many years without the enforcement authorities pursuing criminal charges. In our view, this demonstrates that, as the Canadian government has done in the area of anti-corruption violations, it will not only coordinate its implementation of sanctions with its trading partners but also enforce measures related to economic crimes as its trading partners are doing.

Companies operating abroad should therefore ensure that they have proper compliance programs in place to deal with various economic crimes, including breaches of export controls on goods and services, restrictions on transfers of technology, sanctions, anti-terrorism laws and asset freezes. Indeed, in the case of Lee, a mitigating factor in the setting of the penalty was that the company has implemented a robust compliance program, which it has undertaken to consistently keep updated according to changes in applicable Canadian laws and regulations.  

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.

Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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