Canada: New Canadian Sanctions Legislation In Effect: Sergei Magnitsky Law

On November 3, 2017, the Government of Canada introduced regulations under the recently enacted Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law) (SML) imposing an asset freeze on a number of foreign nationals identified by the government to be responsible for, or complicit in, significant corruption or gross violations of human rights. Like other Canadian sanctions laws, the restrictions set out in SML apply to all persons in Canada and all Canadian citizens and Canadian-incorporated entities operating outside Canada. SML also introduces new screening and reporting obligations for regulated financial institutions in Canada.

SML was enacted on October 18, 2017 and is intended to provide Canada with the tools to "respond to cases of human rights violations and significant acts of corruption anywhere in the world", according to Global Affairs Canada. SML was first introduced as a private member's bill in the Senate and later received the support of Canada's current government to become law. Canada follows the United States and the United Kingdom in enacting SML-type legislation.

DESIGNATIONS

While the federal government has authority under existing Canadian sanctions legislation to impose financial and other restrictions on foreign jurisdictions and their nationals, SML specifically authorizes the government to designate foreign nationals who, in the government's view, are responsible for, or complicit in, gross violations of internationally recognized human rights. A designation under SML may also be made in respect of foreign public officials (or their associates) who, in the government's view, are responsible for, or complicit in, acts of significant corruption.

Based on these grounds, the federal government designated 52 nationals from three jurisdictions —Russia, South Sudan and Venezuela — under the new Justice for Victims of Corrupt Foreign Officials Regulations (SML Regulations). For more information on the designated individuals, please see the news release by Global Affairs Canada.

SML also amended Canada's Special Economic Measures Act (SEMA) to allow for designation, under that legislation, of foreign states and their nationals on similar grounds.

PROHIBITIONS

Under the SML Regulations, persons in Canada and Canadian-incorporated entities and Canadian citizens outside Canada are prohibited from:

  • Dealing, directly or indirectly, in any property of a designated foreign national
  • Entering into or facilitating, directly or indirectly, of any financial transaction related to a dealing in property of a designated foreign national
  • Providing financial services or any other services to, for the benefit of, or on the direction or order of, a designated foreign national
  • Acquiring financial services or any other services for the benefit of, or on the direction or order of, a designated foreign national
  • Making available any property to a designated foreign national or to a person acting on his or her behalf.

The above prohibitions may be waived by the Minister of Foreign Affairs by way of permit issued under the Justice for Victims of Corrupt Foreign Officials Permit Authorization Order.

SCREENING

As with other Canadian sanctions legislation, SML requires federally and provincially regulated financial institutions, including banks, authorized foreign bank branches, credit unions, trust and loan companies, insurers, securities dealers, and money services businesses, to determine on a continuing basis, whether they are in possession or control of property that they have reason to believe is the property of a foreign national designated under SML Regulations. These institutions must therefore ensure that the SML designations are incorporated into the sanctions lists against which they conduct customer screening — whether in-house or through a third-party service provider.

For federally regulated financial institutions, the Office of the Superintendent of Financial Institutions (OSFI) published an advisory notice reiterating its expectation that financial institutions screen against the SML designated names on an ongoing basis (at least weekly) and that the screening extend to beneficial owners of corporate clients where such information is collected under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

REPORTING

Both federal and provincial financial institutions must report monthly to their principal regulator on whether they hold property of a foreign national designated under SML. Financial institutions must therefore ensure that their upcoming monthly sanctions report to be filed with their regulator reflects the new designations under the SML Regulations. This monthly reporting obligation was previously limited to the Iran, North Korea, Venezuela and terrorism designations in Canada.

All transactions involving foreign nationals designated under SML Regulations must also be reported without delay to the Royal Canadian Mounted Police or Canadian Security Intelligence Service. This reporting obligation is not limited to regulated financial institutions and applies to all persons in Canada and all Canadians outside Canada.

PUNISHMENT

Like other Canadian sanctions statutes, SML makes it an offence to knowingly contravene the prohibitions set out in SML. The offence is punishable by criminal fines or imprisonment, but SML does not contemplate an administrative monetary penalties regime for violations.

OTHER CANADIAN SANCTIONS AND ANTI-CORRUPTION LEGISLATION

SML complements the existing Canadian sanctions legislation, including the Freezing Assets of Corrupt Foreign Officials Act, SEMA, the United Nations Act and the Criminal Code. For an overview of Canada's sanctions regime, please see our Primer on Canadian Sanctions Legislation.

For Canadian companies or individuals engaged in international business, SML reinforces the importance of ensuring the implementation of a robust due diligence and screening program for business counterparties, including third-party agents, to avoid inadvertently breaching SML by engaging in prohibited transactions with designated foreign nationals. Due diligence screening of counterparties is equally important for compliance with Canada's anti-corruption legislation. For a description of the importance of anti-corruption due diligence in international transactions, please see our Blakes Bulletin: Importance of Anti-Corruption Due Diligence for International Transactions.

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
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

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