Advisory to Canadian Businesses on Canada’s Sanctions Related to the Russian invasion of Ukraine – Russian invasion of Ukraine

Purpose

Highlight obligations to Canadian businesses established by the sanctions against Russia that Canada has imposed under the Special Economic Measure Act (Russia) Regulations (the SEMA Russia Regulations).

Sanctions against Russia

Since 17 March 2014, Canada has imposed a number of sanctions under the SEMA Russia Regulations in response to the gravity of Russia’s violation of the sovereignty and territorial integrity of Ukraine, and gross and systematic human rights violations that have been committed in Russia.

The SEMA (Russia) Regulations consist of a dealings ban on listed individuals and entities, as well as prohibitions on specified goods and financial, technical or other services related to those goods. The regulations also impose restrictions on certain sectors, such as the financial and energy sectors, and impose broad prohibitions on ships associated with Russia or Russian companies from docking in, or passing through Canada.

To determine whether an individual or entity is a listed person, the Consolidated Canadian Autonomous Sanctions List is available for ease of reference. The Consolidated List includes individuals and entities subject to specific sanctions regulations made under the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA). While listings under the JVCFOA are not made in reference to a specific country, a number of Russian foreign nationals are listed, which may have implications for certain business related activities or transactions. For accurate information on which provisions from a given sanctions regulation apply to a specific individual or entity, reference must be made to the relevant regulations in which that individual or entity is listed.

Sanctions are subject to change without notice. Given the ongoing situation in Ukraine, it is recommended that Canadian businesses reference the Canadian Sanctions website and any updated versions of the regulations before undertaking a desired activity. Additional information is also available on the Sanctions – Russian invasion of Ukraine webpage.

What sanctions mean to Canadian Businesses

The SEMA Russia Regulations impose certain duties with respect to monitoring and reporting. Under this regulation, certain specified entities are required to continually monitor for property in their possession or control that is owned or controlled by or on behalf of a listed person. All persons in Canada and Canadians outside Canada also have a duty to disclose to the Commissioner of the RCMP about the existence of property in their possession or control that they have reason to believe is directly or indirectly owned or controlled by a listed person or an entity owned or controlled by such a person. They must also disclose information about any transaction or attempted transaction relating to that property.

In addition, contraventions of these sanctions are a criminal offence and any related financial transactions may be proceeds of crime. Sanctions evasions, in and of themselves, do not constitute money laundering. In order for money laundering to be present in the context of sanctions evasion, the sanctions evasion would either need to be attempted or committed using proceeds of crime (as defined in the Criminal Code), or the sanctions evasion would need to give rise to or generate proceeds of crime that would then be laundered or attempted to be laundered. Reporting entities that fall under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) are encouraged by The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to be vigilant against proceeds related to efforts to circumvent SEMA sanctions, in addition to their broader obligations. FINTRAC also suggests that reporting entities consider their obligations under SEMA, and any linkages to listed individuals and entities, and any related proxies, when conducting the following:

• Monitoring of financial transactions or attempted financial transactions for reasonable grounds to suspect that they are related to the commission or attempted commission of money laundering or terrorist financing;
• Maintaining strong Know Your Client requirements;
• Maintaining an effective risk-based approach for assessing client risk

Additional References

Resources on Canada’s sanctions

• Canadian sanctions
• Canadian Sanctions Related to Russia
• Consolidated Canadian Autonomous Sanctions List
• Frequently asked questions
• Russia-related sanctions and illicit finance FIU working group statement of intent

Relevant publications from international organizations

• FinCEN Alert, FIN-2022-Alert001, March 7, 2022