In the latest sanctions-related developments, Canada's FINTRAC has agreed to work with other financial intelligence units in relation to sanctions and related anti-money laundering, while Canada has also imposed an additional set of sanctions on Belarusians. These restrictions are in addition to those already imposed in relation to Russia, Belarus and Ukraine under the Special Economic Measures Act as described in our blog posts of February 25, March 3, March 4 and March 15.
Financial Intelligence Units to Focus on Sanctions Violations and Related AML Concerns
FINTRAC has entered into a statement of intent with the financial intelligence units of the other G7 members, as well as those of Australia, New Zealand and the Netherlands. The statement shows that there is agreed intent to enhance financial intelligence on sanction-related matters and associated financial flows and economic activities. This is likely to assist law enforcement authorities in these jurisdictions in investigations of potential sanctions violations as well as related potential money-laundering offences. This may signal greater scrutiny and (potentially) investigation and prosecution of economic sanctions violations than was the case in Canada before Russia's invasion of Ukraine. Greater cooperation between these jurisdictions will make it more difficult for persons designated under sanctions to successfully liquidate assets and move proceeds of sale.
The development also highlights the potential application of Canadian money-laundering and proceeds of crime laws to sanctions violations. In particular, proceeds of transactions that are in breach of Canadian or other jurisdictions' sanctions laws could be determined to be funds that were obtained or derived directly or indirectly from an offence. Canadian criminal law prohibits persons from using, transferring, sending or delivering such proceeds in order to either conceal or convert such proceeds if they know or believe, or are reckless as to whether they were derived from crime.
It is important to understand that proof of intent to conceal is not required if intent to convert is proved. Conversion could be shown, for example if the funds were used to buy an asset or converted into a fiat or cryptocurrency. It will therefore be prudent for Canadian businesses to take steps to ensure that proffered funds that are potentially related to designated persons are not proceeds from transactions that are prohibited under sanctions laws.
More Belarusians Designated by Canada
In yet another round of sanctions imposed by Canada in relation to Russia's war in Ukraine, 22 Belarusian individuals have been designated and are thus subject to a general dealing prohibition. These appear to generally be government officials.
Conclusion
The statement of intent issued by FINTRAC and its partner financial intelligence units is a harbinger of future law enforcement in relation to Canadian and other economic sanctions violations including under anti-money laundering laws. This provides yet another impetus for Canadian businesses to promptly take steps to ensure that they are in compliance with the many new sanctions imposed by Canada in relation to Russia's war in Ukraine.
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