Canada: Canada Eases Its Sanctions On Iran: Eight Tips For Canadian Businesses Seeking To Explore Iran-Related Opportunities

On February 5, 2016, Canada's Minister of Foreign Affairs, Mr. Stéphane Dion, and Canada's Minister of International Trade, Ms. Chrystia Freeland, announced the easing of Canada's economic sanctions against Iran and signalled Canada's willingness to resume dialogue with Iran. The announcement followed Mr. Dion's statements a few days earlier on the willingness of Canada to lift certain economic sanctions on Iran following confirmation by the International Atomic Energy Agency that Iran had fulfilled certain necessary commitments under the Joint Comprehensive Plan of Action (the "Iran Nuclear Deal"). (For an analysis of the Iran Nuclear Deal and Canada's sanctions regime prior to the recent amendments, please consult our previous article on the matter here.

Canada's easing of Iran-related sanctions paves the way for new opportunities for Canadian businesses who are looking to expand their business to the Iranian market or to re-enter the Iranian market after a period of absence due to the sanctions. As the Minister of International Trade stated, "with these amendments to Canadian sanctions against Iran, Canadian companies will now be able to position themselves for new trade opportunities," but the Government "will also maintain rigorous controls on any exports that raise serious proliferation concerns." In fact, while the sanctions against Iran have been relaxed, certain Iran-related transactions remain subject to sanctions and export control rules, and it is therefore crucial for Canadian businesses to proceed with caution and perform necessary due diligence to ensure that their intended transactions are compliant with the current applicable rules.

While the following list is not exhaustive, Canadian businesses should keep the following tips in mind in their Iran-related transactions.

  1. Perform a thorough due diligence with respect to the parties involved in the transaction in order to avoid any illegal dealings with designated and listed persons

Canada currently has two sets of regulations that impose Iran-related sanctions: those that reflect the U.N. sanctions regime and Canada's own set of unilateral sanctions.

Pursuant to the Iran Nuclear Deal, the U.N. sanctions have been lifted by the U.N. Security Council, although certain specific restrictions, such as those relating to the transfer of proliferation sensitive goods, continue to apply. In conformity with the U.N. Security Council actions, Canada has amended its Regulations Implementing the United Nations Resolutions on Iran (the "Iran UN Regulations") accordingly. Following these amendments, certain dealings and activities involving specific persons and products related to Iran's nuclear proliferation and arms industry remain prohibited. It is prohibited, among other things, for any person in Canada to deal in any property in Canada that is owned or controlled by a "designated person" or by a person acting on behalf of or at the direction of such person. The term designated person refers to persons designated as such by the Security Council under certain of its resolutions concerning the Iran nuclear program.

The amended Special Economic Measures (Iran) Regulations (the "SEMA Regulations"), which outline the Canada-specific sanctions against Iran, also include Canada's own list of designated persons, referred to in the regulations as "listed persons". The SEMA Regulations prohibit any person in Canada and any Canadian outside Canada to, among other things and subject to certain exceptions, deal in any property, wherever situated, that is owned, held or controlled by a listed person or a person acting on behalf of a listed person, to facilitate or enter into such transaction, provide any financial or related service in respect of such transaction, to make any goods available to a listed person or provide any financial or related service for the benefit of such person. The listed persons identified in the SEMA Regulations include certain important Iranian institutions, such as certain major banks and aerospace-related entities. It is therefore essential for Canadian businesses to perform proper due diligence with respect to the parties involved in any potential dealings involving Iran in order to avoid illegal transactions with designated and listed persons. 

  1. Ensure that the transaction does not involve sanctioned goods and services

Following the recent amendments to the SEMA Regulations, Canada has significantly scaled back its Iran-related sanctions. Canada has removed the blanket prohibitions on import, export and investment involving Iran and has replaced them with a prohibition on transactions involving specific goods listed in Schedule 2 to the SEMA Regulations. The said schedule lists goods of various nature, and includes goods ranging from raw gold to smelting machinery and products, riot gears and explosive release devices. Under the new rules, it is prohibited for any person in Canada and any Canadian outside Canada to export, sell, supply, or ship goods listed in Schedule 2 to Iran, to a person in Iran or to a person for the purposes of a business carried on in or operated from Iran or to transfer, provide or disclose any technical data related to such goods to Iran or any person in Iran. Any assistance or facilitation, including financing, of these sanctioned acts or an intention to do so are also prohibited under the amended rules.

The Iran UN Regulations, as amended, also provide for prohibitions on transactions involving certain specific products and services related to such products, including products specifically identified under U.N. documents, certain military vehicles and equipment and ballistic missile technology and certain sensitive items on the Dual-use List and Munitions List of Canada's Export Control List. The said regulations also include prohibitions on the provision of products, services and financing pertaining to uranium mining and nuclear materials and technologies.

  1. It is possible to apply for an authorization to the Canadian Government for transactions that would otherwise be illegal under the sanctions

As it had been the case before the recent amendments, it is possible to request a permit from the Minister of Foreign Affairs to carry out a sanctioned activity or transaction under the SEMA Regulations. While there are no formalized procedures or timelines for permit applications and issuance, it remains to be seen whether, in the future, the processing time for such permit applications will be shortened in practice following the removal of the blanket prohibitions on Iran-related transactions.

Under the Iran UN Regulations, the Minister of Foreign Affairs may issue a certificate to authorize an activity restricted by the regulations, on a case-by-case basis, provided that certain requirements are respected.

  1. Beware of export control rules and the recent amendments to such rules with respect to Iran

In addition to sanctions, transactions with Iran are also subject to export control rules. Canada's export control regime is intended to control the export of sensitive equipment, software and technology to promote national security interests and foreign policy objectives.

On February 5, 2016, Global Affairs Canada issued a Notice to Exporters noting changes regarding the export of items to Iran.1 The Notice indicated that applications for export permits for all items listed on the Export Control List2 will be considered on a case-by-case basis. However, applications to export "sensitive items" will normally be denied. Such items include nuclear goods and technologies, as well as goods and technologies which could assist the development of Iran's ballistic missiles program. A full list of such sensitive items is provided in the Notice. Canadian businesses intending to explore opportunities in Iran are advised to consult the Notice to ensure the list does not cover any products intended for export.

  1. Beware of applicable foreign sanctions and restrictions

While the European Union and the U.S. have lifted select sanctions against Iran, Canadian businesses need to remain vigilant as to whether they are subject to foreign sanctions laws when dealing with Iran. When structuring a deal, the currency will need to be considered: U.S. dollar transactions continue to be virtually prohibited because no payments linked to Iran may be processed through the U.S. financial system. 

Similarly, non-U.S. persons are still prohibited from engaging in any conduct that seeks to evade or circumvent U.S. sanctions laws, including the re-export of U.S. origin goods and technology to Iran. At the same time, Canada's Export Controls List requires an export permit for the re-export from Canada of U.S. origin goods. Complications arise due to the fact that the U.S. and Canada define "U.S. origin" goods differently, with the U.S. imposing a lower threshold of U.S. origin content for the good or technology to be captured by their laws.

As a result, a Canadian entity could unwittingly be subject to foreign sanctions laws as well as Canadian laws and businesses may need to seek European Union or U.S. legal advice if there is a risk that the transaction may also be subject to foreign sanctions laws.

  1. Verify whether insurance and  financial institutions will provide the necessary support services for the contemplated transaction

While Canada's blanket restrictions on financial transactions involving Iran have been replaced by the less stringent rules explained above, many financial and insurance service providers may favor a cautious approach and refuse to process payments or offer support services for Iran-related transactions. The potential for increased trade with Iran depends largely on the willingness of banks and insurance providers to facilitate processing of payments. At present, it is uncertain whether and how financial and insurance services providers will adjust to the new realities associated with the easing of sanctions against Iran by Canada and its peers.

  1. Seek legal advice regarding the contemplated transaction to ensure that it complies with Canadian and foreign applicable laws

Canada has significantly relaxed its sanctions on Iran. However, certain Canadian and foreign sanctions and export controls by Canada and its peers (including the U.S.) remain in place and violating such restrictions can have grave consequences. It is therefore essential for Canadian businesses to seek legal advice from Canadian and, where foreign laws may be applicable, foreign legal experts to ensure that their contemplated transactions are compliant with all applicable legislation. 

Businesses who intend to engage in Iran-related transactions are also advised to perform thorough due diligence and obtain all required information with respect to the parties involved, including their full name, the name of their parent entities and the identities of their shareholders and directors as well as a complete list of goods to be shipped pursuant to the transaction, the ultimate purpose of the purchase and the modalities of any financing that may need to be provided. Detailed background information on the transaction allows for a more accurate evaluation of the legality of the contemplated transaction.

  1. Have the following due diligence checklist in mind when contemplating a transaction with an Iranian individual or entity

In light of the above, when contemplating a transaction with an Iranian person or entity, here are the preliminary questions to ask:

  • Is the other party a designated person under the Iran UN Resolutions?
  • Is the other party a listed person under the SEMA Regulations?
  • Is the good or service to be delivered subject to the Iran UN Regulations or the SEMA Regulations?

If you answered yes to any of the above questions, you are likely prohibited from entering into a business arrangement with that person or entity, unless a permit authorizing the transaction is obtained from the Minister of Foreign Affairs.

  • Is the good or service subject to Canada's Export Control List?

If the item is only covered by the Export Control List, then you may be able to apply for an export permit. It is also essential to look into the possibility of whether or not the transaction is subject to foreign sanctions and restrictions.


1 "Notice to Exporters" (5 February 2016), Global Affairs Canada, online: <>.

2 Export Control List, SOR/89-202, online <>.

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 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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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